Thursday, November 8, 2012

Will Federal Spending Put Us At a Tipping Point By 2015

In 2011, the Democrats of the Senate Budget Committee put together a power-point presentation with regard to this nation's accumulated debt and spending.  The very first slide of that presentation showed a U.S. dollar with 40% of it being covered up by the word "borrowed"; meaning that for every dollar of spending, 40 cents is with borrowed money.  At the time of that presentation, our debt was still under $14 trillion but quickly approaching $15 trillion.  Today, our debt is 10% higher with it above $16 trillion.  This means that the 40 cents in that presentation is now 10% higher; probably around 44 cents.

Now, here's an important thing to understand.  Obama's own Treasury Department is now projecting that the federal deficit will hit $20 trillion by 2015.  Or, in other words, our debt will be 33% higher than it was in 2011 when 40 cents of every dollar was being borrowed.  If that becomes fact, it means that we will have already hit a disastrous tipping point where our government's operation will be majority run by borrowed money; 51 cents or greater for every dollar of spending. What that, then, means is that we will literately have to borrow money to pay off what we've already borrowed.  This is a death spiral.  It is how Greece became the economic mess it is today.

There's no single way that a country can get itself out of trouble when it reaches this kind of debt situation; especially when dealing with debt that is in the double-digit trillions of dollars.  One way is to print more money.  But, that will just cause massive inflation; forcing the economy and tax revenues to stall out.  Another way is to raise taxes.  But, raising taxes can, too, weaken the economy and result in lower tax revenues.  The best way is to cut spending.  But, nobody is going to want their pet spending cut. That's why we are seeing the riots in Greece as the government tries to implement austerity programs. 

The bottom line is that we are heading for serious trouble and its not far away.  Obama has literately steered this country into disaster.

--- Democrats Power Point Presentation on Debt and Spending:

--- Real Clear Politics: Debt to hit $20 Trillion by 2015:

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