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National Debt Hits Highest Level Since World War II
CBO Director Douglas Elmendorf broke down the numbers in a blog post, explaining that the dramatic jump in debt stems partly from lower tax revenues and increased federal spending "related to the recent severe recession and turmoil in financial markets."
One of the biggest challenges to keeping a manageable debt level remains soaring health care costs, specifically those related to Medicare, according to Elmendorf.
"CBO projects that if current laws do not change, federal spending on major mandatory health care programs will grow from roughly 5 percent of GDP today to about 10 percent in 2035 and will continue to increase thereafter," he wrote. Elmendorf outlined what he considered to be the most significant "negative impacts" that an out of control national debt would have on the overall economy:
The budget office report came as the White House fiscal commission met again Wednesday to figure out ways to reduce deficits and the debt.
- Large budget deficits would reduce national savings, leading to higher interest rates, more borrowing from abroad, and less domestic investment -- which in turn would lower income growth in the United States.
- Growing debt would also reduce lawmakers' ability to respond to economic downturns and other challenges.
- Over time, higher debt would increase the probability of a fiscal crisis in which investors would lose confidence in the government's ability to manage its budget, and the government would be forced to pay much more to borrow money.
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Bill Clinton left a nice surplus when he left office. Unfortunately George Bush squandered all of that AND ran up huge deficits with his tax cuts for the rich while waging two disastrous wars.
July 03 2010 at 4:33 PM Report abuse Permalink rate up rate down ReplyReversing the tide of the national debt is going to require HUGE sacrifices in this country. Massive spending and entitlement cuts, net tax increases and wholesale elimination of government programs. The question is can the current American population handle that? Judging from what I see, most of them will not last a month without Big Brother around to wipe their backsides. Can you say 1929?
June 30 2010 at 10:00 PM Report abuse Permalink +2 rate up rate down ReplyWhat we need most is tax increases for the wealthy. The biggest "entitlement program" is Social Security--it's an entitlement because people paid into it their whole lives and are entitled to it, as it's their own money. Cutting that is theft. The wealthy dodge pay a very low percent of their personal wealth in taxes, but use deceptive techniques to deny this--for example, Capital Gains is one of their biggest sources of income, but they don't even count it as income. They count the tiny part of their income that is a paycheck and then say, "We pay the largest percent," while they've been rolling in stock and company shares and investment real estate they receive at cut rates when the true middle class get foreclosed on, and all that wealth brought in doesn't even count as income and on that income, they pay a lower tax rate than those that are below the poverty line pay on their taxes.
February 13 2011 at 8:44 AM Report abuse Permalink rate up rate down ReplyWhat in the world would the politicians do with their time, if they weren't thinking up ways to take more of your money, and telling you how you must live your life, all the while exempting themselves from the rules and regs, and building their own little nest eggs by hook and by crook?
June 30 2010 at 9:15 PM Report abuse Permalink +2 rate up rate down ReplyReagan raised the debt by $3 trillion in 1980 dollars spending his way out of the 1982 recession. W added another $several trillion (not sure if that included the war spending) when there was but a small recession and somehow it is this president's fault. Does anyone have a better proven method to get us out of a recession than spending us out? I've not heard the opposition even suggest a solution, have you? You all know the reason too. (They have none). They put us here in the 1st place, just like Hoover did in the 30's
June 30 2010 at 5:38 PM Report abuse Permalink -7 rate up rate down ReplyIf employers and taxpayers had the assurance that hard work and investment would yield a return not confiscated by a growing Federal government, they would be more likely to take the actions that result in more wealth generation. How's that for a plan?
KMA, study your history. Hoover tried mightily to boost the economy with greater spending. It did not work for Hoover or for FDR, whose fumbling attempts to centrally manage the economy both prolonged and deepened the Great Depression. We are repeating the failed policies of the past.
Lower parasitic drag on the productive economy and it will run faster. Jack up taxes and energy costs while increasing uncertainty, and it will slow down, as it is doing and always has under those constraints.
Seams to mee if my household was in the same place as our goverment the last thing i would is reduce the amount of money my tenant pays while hes under contract. I would do every thing i could to increase income and i would cut spending for not absolutly needed items. Such as money to Isareal money for futer weapons welfare to coporations. Id raise money to pay off our debt with a tax on all goods entering usa. this tax money must go to pay down the debt and nothing else. Id tax any company that moves job out of usa or makes its product over seas untill it is in corporations best interest to build it here. I dont fall for the idea they wont stay here .Ya it be real smart to abandon 300 million of the wealthest peaple in the world
June 30 2010 at 5:09 PM Report abuse Permalink +8 rate up rate down ReplyWolfsonny much of what you said, protectionism, is EXACTLY the government interventions that many scholars feel triggered a recession into a Great depression.
June 30 2010 at 8:37 PM Report abuse Permalink rate up rate down ReplyGrowing debt would also reduce lawmakers' ability to respond to economic downturns and other challenges.
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Ahh... That explains why Reagan TRIPLED THE DEBT, which kept rising under GHW Bush, shot UP even further under GW Bush!
Make up your mind, bbb. If it was bad then, it is bad now. It was, and is.
June 30 2010 at 6:07 PM Report abuse Permalink +8 rate up rate down ReplyBut Michael I was just pointing out it was only BAD under Republican Presidents!!
Which explains why the GOBP is desperate to make sure the economy double-dips again under Obama, the Dem.
The national debt has been about 2.7% of the GNP since
FDR untill 2008 under Bush it went to 3.9% because
of the bank bail out. Anyone can look this up, under
Obama 7% going to 10%, in dollars under Bush 2008 450 billon
Obama 2009 1.75 trillon and up. this is from the White House report.
......and Obama says we can spend our way out of recession. Complete ignorance or a disconnect with reality ? You decide.
June 30 2010 at 4:16 PM Report abuse Permalink +17 rate up rate down ReplyI just can't believe what I just heard from this President. He wants to CONTINUE SPENDING!!!!! What is he thinking? Does he not see what is happening all over the world? Germany has tried to tell him his policy will not work along with Greece, Spain, and others. He was about the only one who thinks different from the G-8/20 meeting. I am now past believing his actions are what he believes will work. I starting to believe he really does have another agenda! What else is there to believe?
June 30 2010 at 4:13 PM Report abuse Permalink +17 rate up rate down Replystand,
All you folks complain that Obama is spending, and that this will not help us out of the recession we are still in. However, you also complain that he has done nothing to create jobs. What would you have him do to create jobs, if not spend money to do so?
The republicans and their friends at FOX NEWS say that they want to cut our national debt. However they seem to spend most of their time fighting to keep those HUGE BUSH TAX CUTS FOR THE RICH that expire at the end of this year.
June 30 2010 at 4:09 PM Report abuse Permalink -15 rate up rate down Reply
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