April 10, 2010

Democrats Initiating A Debt Crisis With Their Irresponsible Spending

Yesterday, The Washington Post wrote, "he debt crisis that has taken root in Greece, sparking an investor panic and talk of a national default in the heart of Europe, is at the leading edge of a problem expected to roll through the economically developed world as government borrowing rises into uncharted territory. This mounting government debt poses a painful choice for developed countries such as Britain, Japan and the United States: either a deep reordering of public expectations about everything from the retirement age to tax rates, or slower growth as record levels of borrowing crimp economic activity. Economists at the International Monetary Fund project that the amount of government debt held in the world’s advanced economies will soon be so great that it surpasses the value of what they produce in a year."

The Post noted "In the United States, where the federal government's debt has reached 84% of GDP, Federal Reserve Chairman Ben S. Bernanke spelled out the risks in a speech this week calling for restraint of public spending on entitlement programs."

These warnings from the Fed chair and the IMF come only a couple weeks after President Obama signed into law a massive expansion of entitlement spending in the form of his $2.6 trillion health care takeover, which both the CBO and the administration’s own actuary at the Centers for Medicare and Medicaid Services have said will increase government health expenditures. CBO estimated an increase in health spending of $210 billion over the next decade, while CMS estimated a $222 billion increase over the same period.

Looking at this mountain of debt and the increase in our obligations thanks to the health care bill, the publisher of the Las Vegas Review-Journal declares today that "Harry Reid and friends turned us into Greece." He adds, "The Obama/Reid/Pelosi policies are poised to financially swamp us as a nation."

On Thursday, the CBO released its Monthly Budget Review for February and announced that "[t]he federal government incurred a budget deficit of $714 billion in the first six months of fiscal year 2010 . . . ." Washington Post columnist Robert Samuelson noted recently, "Two weeks before the House vote [on health care], the Congressional Budget Office released its estimate of Obama’s budget, including its health-care program. From 2011 to 2020, the cumulative deficit is almost $10 trillion. Adding 2009 and 2010, the total rises to $12.7 trillion. In 2020, the projected annual deficit is $1.25 trillion, equal to 5.6%  of the economy (gross domestic product). That assumes economic recovery, with unemployment at 5%. Spending is almost 30% higher than taxes. Total debt held by the public rises from 40% of GDP in 2008 to 90% in 2020, close to its post-World War II peak."

As Samuelson said, "Should the United States someday suffer a budget crisis, it will be hard not to conclude that Obama and his allies sowed the seeds, because they ignored conspicuous warnings. A further irony will not escape historians. For two years, Obama and members of Congress have angrily blamed the shortsightedness and selfishness of bankers and rating agencies for causing the recent financial crisis. The president and his supporters, historians will note, were equally shortsighted and self-centered -- though their quest was for political glory, not financial gain."

Tags: debt, debt crisis, democrats, CBO,
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