The Truth About Our Economy

The Truth About Our Economy

Some recent reports claim the federal debt has declined, and while this assertion may be technically true, the glimmer of hope that it sparks is fleeting at best. The Washington Post released an article that sheds light on the actual state of the economy and what Americans can realistically expect. According to the article, “the annual federal deficit is way down from its recent alarming peak; CBO’s deficit forecast for the current fiscal year, 2.9 percent of gross domestic product, compares to 10.8 percent in recession-racked fiscal 2009. Economic recovery, low interest rates engineered by the Federal Reserve, higher income taxes on top earners and the budget-cutting measure known as sequestration have all helped slow the red ink. Indeed, CBO thinks that deficits should remain below 3 percent of GDP through 2018, a slightly more optimistic view than it expressed in its last update four months ago.” The article continues, “the problem, however, is the long term. CBO identifies no scenario under which national debt drops below 72 percent of GDP over the next decade; that’s far above historical norms. It reaches 77.2 percent of GDP in 2024, at which point it starts rapidly increasing again. Future deficit increases are driven by health care, Social Security and interest payments. Those three categories of automatic spending account for 85 percent of the increase in outlays CBO predicts between now and 2024. For what seems like the umpteenth time, CBO warns, correctly, that this is dangerous because there is always the chance of a bond market rebellion that would precipitate ‘fiscal crisis.’”

Clearly, fiscal strategy that ignores the devastating impact of entitlement spending, particularly as the number of baby boomers continues to bloom, and of defense spending, as jihadists continue to rage, can spell doom and gloom for the nation. Let’s hope the government’s short-term vision and refusal to make hard choices do not undermine the long-term security of our nation.

 

Click here to read the full Washington Post article. 

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