Exploding debt threatens America
Published: May 26 2009 20:48
The writer, is a professor of economics at Stanford and a senior fellow at the Hoover Institution
The short version:
The federal debt was 41% of GDP at the end of 2008. the CBO estimates it will double to 82% in 10 years.
In order to balance the budget, a permanent 60% across the board increase in taxes will be required. The alternative is a 100% rise in inflation.
There is no economic theory or evidence that shows that deficits in 5-10 years will help us get out of this recession. Assuming that the CBO is accurate and we will be back to normal in 2014, the responsible thing to do at that point is to reduce deficits, not continue spending with total abandon.
“But we will cut the deficit in half.” CBO analysts project that the deficit will be the same in 2019 as the administration estimates for 2010, a zero per cent cut.
The current administration is all about fixing the "systemic risk" in the private sector (finance, banking, automotive). The real systemic risk is the government and unabated spending.