A look at the National Debt

One of the greatest problems facing the American economic recovery is the growth of the National Debt. Unfortunately, it also seems to be the issue that no one wants to think about, at least not since Bush left office.

As of January 2009, the national debt became a forgotten issue, something easily blamed on greedy free-market right-wingers and the Bush administration. Which is not a bad place to start. Increases in Government spending under Bush we're horrendous, and the republicans’ willingness to go along with him strips them of any credibility on this issue. This is why it's so strange to look at current fiscal policy. Not only are we continuing the economic policies of George Bush, we are betting the future of our country on them.

The spending policies of the current administration have increased the debt more then every President in American history, combined! More then 43 cents of every dollar spent by Washington is borrowed or printed. This devalues the dollar, (as we are already seeing) and increases the risk of destroying the savings of American taxpayers. Because politicians refuse to act on this by reducing there spending habits, the current $6 trillion debt is projected to double by 2012 and triple by 2019! The Obama administration continues to claim that they will be able to cut the deficit in half by 2013, but their policies have already quadrupled the debt in only 9 months. This is excluding Health Care and Cap and Trade legislation, which would add more than $2 trillion more in immediate government spending. It is important to point out at this juncture, that the government doesn't make any money, nor any profits. They can only detract from the private sector, or attempt to encourage growth through economic development (which they are terrible at doing). They rely completely on the success of businesses and individuals outside of their own function to pay off debt they created. An article in the Wall Street Journal this week illustrates the main points on the debt rather well.

"As of Sept. 30, 2009, the national debt was almost $12 trillion and interest on that debt was $383 billion for the year, according to the Treasury Department's Bureau of the Public Debt. The Congressional Budget Office on Oct. 7 estimated the 2009 budget deficit to be almost $1.4 trillion (about 10% of GDP). In August, the White House Office of Management and Budget (OMB) estimated total government revenues at about $2 trillion. The revenue estimate included $904 billion from individual income taxes. This means the cost of interest on the debt represented more than 40 cents of every dollar that came in from individual income taxes."

"The OMB projects deficits of about $9 trillion over the next 10 years. If that occurs, the national debt will be almost $21 trillion by 2019. However, the actual amount could be much higher. The OMB also optimistically projects $13.5 trillion of revenue increases over the next decade, while minimizing the inevitable rise in interest rates that will come with an expanding national debt."

In my opinion, these estimates are extremely unrealistic, and far too optimistic They assume government spending won't increase above current inflationary levels and that the health care bill will reduce the deficit. This is a ridiculous and absurd assumption. The current disregard for our economic future on the part of elected politician (who care only about the next election) is as near a criminal offense as any "legal" action could be. The wall street Journal article is linked below. It was written by Lawrence Kadish and titled: Taking the National Debt Seriously

http://online.wsj.com/article/SB10001424052748704429304574467071019099570.html