By Fr. George Welzbacher
July 17, 2011
In the past few years Indonesia first and then Japan have provided us with a crash course on tsunamis-their speed, their mass, and their devastating force. And something very like a tsunami is barreling straight towards us at gathering speed as a result of our national debt. The sober-voiced accountants at the Congressional Budget Office are not known to be given to histrionics, but they have sounded the alarm in their latest annual report (June 22nd): "The Long-Term Budget Outlook." We are in imminent danger of financial collapse. And since (at least in worldly matters) money is power, and the lack thereof is impotence, when we do go "bust", as is likely to happen sooner than we think, our liberties may go sailing down the wind not so very long thereafter. No hysteria here; just the heartless verdict of mathematics. Anyone who takes the trouble to "do the math" can reach no other conclusion. The problem is that rather too many of our national leaders aren't willing to "do the math." To switch metaphors, they're behaving like porters on a train that's speeding merrily on its way towards a trestle that's no longer there, its supports washed away in raging floods. And the porters, all smiles, are walking down the aisle, asking if anyone needs a pillow.
May I share with you an editorial from that excellent journal, The Weekly Standard, for July the fourth. Its focus is the Congressional Budget Office's report.
* * * * *'We Don't Estimate Speeches'
Weekly Standard of July 4-11th, 2011
On June 22, the Congressional Budget Office released its annual "Long-Term Budget Outlook." To call the document GRIM would be a grave understatement. It describes a massive wave of debt that threatens very soon to drown us-and that, thanks to the weak economy and the CONTINUING GROWTH OF SPENDING, is coming at us very fast.
In last year's outlook, which was alarming enough, the CBO projected that our national debt would be 91 percent of our Gross Domestic Product in 2021. The agency NOW says debt will be 101 percent of GDP in 2021-that is, a decade from now our debt will be LARGER than our economy, and still growing quickly. By 2030, CBO projects debt will top 150 percent of the economy, and by 2037 it will be 200 percent and growing. At that point, the federal government would be spending almost a tenth of the nation's gross domestic product on INTEREST payments ALONE, up from 1 percent today.
No nation could prosper under such a massive burden of debt. The Congressional Budget Office is notoriously UNDERSTATED in drawing conclusions from the figures it provides, but last week's report brims with barely restrained PANIC. Alarming as the raw figures are, the report notes, its projections "do NOT include the harmful effects that rising debt would have on economic growth and interest rates. IF those effects were taken into account, projected debt would increase EVEN FASTER." "Rising debt," moreover, "would increasingly restrict policy makers' ability to use tax and spending policies to respond to UNEXPECTED challenges, such as economic downturns or financial crises."
And a CRISIS is exactly what we should expect. "Growing federal debt," the report states, "also would increase the probability of a SUDDEN fiscal crisis, during which investors would lose confidence in the government's ability to manage its budget and the government would thereby lose its ability to borrow at AFFORDABLE rates." In the poker-faced bureaucratic parlance of the CBO, this kind of talk is tantamount to shouting FIRE!
To be sure, all of this will happen ONLY IF WE FAIL TO CHANGE COURSE. It will be a choice made knowingly by leaders who were warned well in advance about the consequences. Congressional Republicans have offered a detailed alternative to this dire scenario: The budget they passed in April would curtail spending and reform entitlement programs to reduce the debt dramatically and enable economic growth....
The Democratic Senate has not proposed a budget in either of the last two years. In February, President Obama offered a budget that would actually INCREASE the deficit. Then in a speech in April he essentially retracted it, and offered in its place a vague ... series of policy goals..... On June 23, at a hearing of the Budget Committee, Congressional Budget Office director Douglas Elmendorf was asked what his agency made of the proposals in that presidential address. "We don't estimate speeches," he said. "We need much more SPECIFICITY than was provided in that speech...."
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