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The National Debt Is Coming Due, Just Like We Told You
 [reason - Free Minds and Free Markets] What happens when you borrow the equivalent of your annual income and those low, low teaser rates start to increase? Congratulations, America, you're about to find out.The Wall Street Journal reports some non-shocking, non-surprising news: In 2017, interest costs on federal debt of $263 billion accounted for 6.6% of all government spending and 1.4% of gross domestic product, well below averages of the previous 50 years. The Congressional Budget Office estimates interest spending will rise to $915 billion by 2028, or 13% of all outlays and 3.1% of gross domestic product....A quick recap of our dismal national fiances: The U.S. economy generates about $21 trillion in annual activity. Debt owed to the public comes to about $15.5 trillion, but when you add intra-governmental debt (which you should, because it represents actual commitments to pay), the figure is...about $21 trillion. This is not good, both for obvious and and for less obvious reasons. Among the obvious problems: When you have to pay more in interest, it crowds out your ability to spend on other things. If you're a government, it also might mean that you raise taxes or inflate your money. (You could also cut spending, but politicians tend to resist that for as long as possible.) The federal government spends about $4.4 trillion a year, split among several categories, including what is considered "mandatory" and "discretionary." The mandatory stuff includes entitlements, such as Social Security, Medicare, and Medicaid. Congress doesn't need to vote on this spending for it to continue. Discretionary spending includes spending on the military, homeland security, schools, and other stuff that does need to get voted on. The percentage of spending that is mandatory has grown from around 30 percent in 1962 to about 62 percent of federal outlays today. Discretionary spending comes to about 30 percent, and interest on the debt rounds out the rest. Government spending will increase whether a divided government does anything or not. And, absent significant changes in current law, what the government spends on will be more and more limited. From a libertarian perspective, less government spending is a good thing, but we're not really going to get that, even with a gridlocked Congress. Posted by: Besoeker 2018-11-13 |
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