Second Chance in Debt Deluge

By:  Charles Scaliger
08/25/2011
       
Second Chance in Debt Deluge

With the raising of the debt ceiling, the “official” federal debt immediately surged past a new and unwelcome benchmark: The national debt now exceeds 100 percent of the gross domestic product for the first time since the Second World War era. With the debt now at $14.58 trillion and climbing vertiginously every day even as the economy continues to stagnate, it will not be very long before the national debt reaches 200 percent and higher. In fact, with over $45 trillion owed to Social Security, Medicare, and Medicaid recipients both present and future, the actual size of the national debt is already more than four times the GDP.

As for the so-called “cuts” enacted by this Congress, the long and rancorous debate produced essentially nothing. In exchange for statutory authority to raise the debt ceiling by another $2.4 trillion, the bill provides for cuts of only $900 billion, and for a special congressional committee to come up with an additional $1.5 trillion in savings — over the next decade in projected future spending. In other words, the bill makes no meaningful cuts in the government while providing for another $1.5 trillion in debt over the next year or so — this in exchange for vague promises of a comparable amount in cuts spaced out over 10 years, while the debt ceiling is raised again and again. Such is the nature of “compromise” in official Washington.

With the raising of the debt ceiling, the “official” federal debt immediately surged past a new and unwelcome benchmark: The national debt now exceeds 100 percent of the gross domestic product for the first time since the Second World War era. With the debt now at $14.58 trillion and climbing vertiginously every day even as the economy continues to stagnate, it will not be very long before the national debt reaches 200 percent and higher. In fact, with over $45 trillion owed to Social Security, Medicare, and Medicaid recipients both present and future, the actual size of the national debt is already more than four times the GDP.

As for the so-called “cuts” enacted by this Congress, the long and rancorous debate produced essentially nothing. In exchange for statutory authority to raise the debt ceiling by another $2.4 trillion, the bill provides for cuts of only $900 billion, and for a special congressional committee to come up with an additional $1.5 trillion in savings — over the next decade in projected future spending. In other words, the bill makes no meaningful cuts in the government while providing for another $1.5 trillion in debt over the next year or so — this in exchange for vague promises of a comparable amount in cuts spaced out over 10 years, while the debt ceiling is raised again and again. Such is the nature of “compromise” in official Washington.

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