From the Fiscal Times (other reports linked below):
Here’s more bad news for President Obama: The non-partisan Congressional Budget Office warned Tuesday in its annual budget outlook that unchecked spending on Medicare, Social Security and other entitlement programs is “unsustainable” and will eventually drive the federally held debt to historic levels – and threaten the economy.
While the administration last week celebrated an improving economy and steadily declining budget deficit, the new CBO report says the long-term debt could reach the equivalent of 100 percent of the overall economy within 25 years. Publicly held debt, by contrast, currently equals about 74 percent of the Gross Domestic Product.
At the same time, most other government programs and services – so-called discretionary spending that is essential to the smooth operation of government – would be severely squeezed.
After several more years of declining deficits and overall debt, budget deficits will begin to rise again. “Debt would be on an upward path relative to the size of the economy, a trend that could not be sustained indefinitely,” says the CBO’s 2014 Long-Term Budget Outlook.
I personally think the way that this will be dealt with is through continued massive printing of dollars, devaluing the debt that is held.
(What does that mean for you? It means that the dollars you hold will become increasingly worthless…if you don’t like $4 a gallon gas, wait till it costs $12. If you don’t like paying $5 for a gallon of milk, wait till it costs $15 a gallon…and so on)
Oh, and by the way, I also don’t think there is anything that can, on a practical way, be done about it:
We aren’t going to eliminate mandatory spending – can you imagine the outcry if they tried to get rid of the tax credits associated with Obamacare, if they tried to get rid of Medicare, if they tried to do away with food stamps? Politically, it is impossible.
We can’t tax our way out of it. First, if we were to do so, the economy would grind to a halt. Secondly, if you look at how things really work, “the 1%” will end up either making sure that there are enough loopholes written into the tax code so that they will be able to shelter “their stuff” from the tax man…and, barring that, they’ll move it overseas.
Bottom line: a train wreck is coming and there’s not too much that any of us can do about it.