The current debt talks are discussing cutting roughly $2 trillion from the debt, which currently sits at about $14 trillion, over the next decade. That $200 billion / yr. cut represents a cumulative cut of about 14% off of the current total debt. The Democrats are scoffing at the prospect of cutting that meager amount.
Interest payments on the debt as of 2010 were roughly $200 billion annually. That means even if we get the deficit reduction deal the Republicans want (and Democrats oppose) the cuts won't even cover the current interest on the debt. How are we supposed to start paying down the debt and remain solvent if the supposed cuts and "fixes" won't even cover our interest payments?
Now, consider this rosy scenario. Interest rates are at historic lows thanks to the Feds and the recession. What happens to the debt when those rates go up naturally? What happens to the debt when the Feds decide to raise rates to combat the inflation that results from Obama's spending orgy? That $2 trillion in cuts we've squabbling over? Say goodbye to that when interest rates rise.
Anyone reading this who has a nominal level of intelligence knows what'll happen to the debt if drastic spending cuts aren't made and interest rates rise. Anyone with basic intelligence knows you can't simply raise taxes to fix this. The hole Bush, Obama and liberals in Congress have put us in is just too deep.
It's the spending, stupid! Yet if you listen to CNN and the MSM it's all "ZOMG! We're going to default because of those evil Republicans. There's little talk of the consequences of our current spending orgy.
Subscribe to:
Post Comments (Atom)
2 comments:
That isn't the worst of it. The government took in $2.16 trillion in taxes during FY2010.
The government spent $3.46 trillion, meaning that we had to borrow $1.3 trillion.
In order to lower the debt by $2 trillion in ten years, we have to run a $200 billion surplus.
This means that the budget must be altered by $1.5 trillion.
Since Medicare, Medicaid, Social Security, and interest on the debt cannot be cut, we are screwed. Why? Those programs cost the government $1.7 trillion, meaning that all other spending must equal less than $260 billion a year for all other expenditures, including defense, welfare, food stamps, and all other government spending.
I'd say the scariest bit is that you can call $200 billion a year "meager" and not be exaggerating...
Post a Comment