Carolina Politics Online

In fiscal crises in a number of countries around the world, investors have lost confidence in governments’ abilities to manage their budgets, and those governments have lost their ability to borrow at affordable rates. With U.S. government debt already at a level that is high by historical standards, and the prospect that, under current policies, federal debt would continue to grow, it is possible that interest rates might rise gradually as investors’ confidence in the U.S. government’s finances declined, giving legislators sufficient time to make policy choices that could avert a crisis. It is also possible, however, that investors would lose confidence abruptly and interest rates on government debt would rise sharply, as evidenced by the experiences of other countries.

Unfortunately, there is no way to predict with any confidence whether and when such a crisis might occur in the United States. In a brief (“Federal Debt and the Risk of a Fiscal Crisis“) released today, CBO notes that there is no identifiable “tipping point” of debt relative to the nation’s output (gross domestic product, or GDP) that would indicate that such a crisis is likely or imminent. However, in the United States, the ratio of federal debt to GDP is climbing into unfamiliar territory—and all else being equal, the higher the debt, the greater the risk of such a crisis.

Over the past few years, U.S. government debt held by the public has grown rapidly. According to CBO’s projections, federal debt held by the public will stand at 62 percent of GDP at the end of fiscal year 2010, having risen from 36 percent at the end of fiscal year 2007, just before the recession began. In only one other period in U.S. history—during and shortly after World War II—has that figure exceeded 50 percent.

Further increases in federal debt relative to the nation’s output almost certainly lie ahead if current policies remain in place. The aging of the population and rising costs for health care will push federal spending, measured as a percentage of GDP, well above the levels experienced in recent decades. Unless policymakers restrain the growth of spending, increase revenues significantly as a share of GDP, or adopt some combination of those two approaches, growing budget deficits will cause debt to rise to unsupportable levels

CBO Director’s Blog

The CBO paints a very grim picture for the future of our nation if the government doesn’t restrain itself from continuing to flush our money down the toilet like we have an endless supply of it.  We are headed into Greece territory in which we will collapse under our debt, but who will come to the aid of the U.S. to  bail us out??

Remember, this was a bipartisan ass raping in the making.  George W Bush took 200 years worth of Federal debt and doubled it in eight.  Now Obama has taken over and kicked debt spending up into hyperdrive.  The men and women in Congress have shamefully written these budgets without the slightest regard for what they are bringing upon us in the future and this year they didn’t even write a budget for the next fiscal year because they don’t want the American people to know right before the elections that next year’s budget will have over a trillion dollars in debt spending like this year’s.  Remember all of this when you go to vote in November.

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