Unhappy parents and kids

Current federal spending trends will add $19 trillion to the U.S. national debt over the next ten years, $3 trillion more than previously estimated, because of additional expenses in interest payments, military budgets, and retirement and veterans benefits, the Congressional Budget Office (CBO) said in a 15 February report.

This year’s budget gap will be $1.4 trillion, with an average of $2 trillion being added annually through the next decade. Federal tax revenue will be unable to keep pace with greater Medicare and Social Security benefits pledged to the rising tide of retiring Baby Boomers.

At this pace, the national debt will equal the U.S. GDP next year and swell to 118 percent of the country’s total economic output by 2033, the nonpartisan CBO calculated.

More bad news: the U.S. economy will grow barely at all this year, when figures are adjusted to include inflation’s impact. Unemployment will rise to 5 percent before the economy resumes growing normally in 2025.

This year’s sluggish performance is due to the U.S. Federal Reserve’s aggressive run of interest rate increases, the CBO said.

“Over the long term, our projections suggest that changes in fiscal policy must be made to address the rising cost of interest and mitigate other adverse consequences of high and rising debt,” CBO director Phillip Swagel wrote in a letter accompanying the report.

New spending measures Congress enacted since last May will grow the debt by another $1.5 trillion to 2033, with half of that spike caused by increased health care benefits for military veterans exposed to toxic burn pits.

Both Democrats and Republicans overwhelmingly voted for the measure.

Another $550 billion was allotted for military expenditures, largely to support Ukraine in defending itself against Russia’s invasion.

The recent rise in borrowing costs inflicted by the Fed’s interest rate hikes has raised future interest payments by $2.4 trillion over the next decade, lifting them from $8 trillion to $10.4 trillion.

The current U.S. public debt of $31.4 trillion has been accumulating since about the year 2000, which was about the last time the federal government collected more revenue than it spent, the CBO noted.

Tax cuts were enacted under presidents George W. Bush, Obama, and Trump.

The costs of wars in Afghanistan and Iraq were not balanced by spending cuts elsewhere. Massive emergency spending took place under Obama, Trump, and Biden to rescue the economy from the Great Recession and the impact of the COVID War’s economic shutdown.

“The warning is that the fiscal trajectory is unsustainable,” Swagel told a press briefing when the CBO report was released.

It is “mathematically impossible” to balance the budget without significant changes to the structure of Medicare and Social Security, he said. 

“This new report makes clear just how vulnerable we are to a vicious cycle of higher interest payments, requiring more borrowing and ever more debt and interest,” Michael Peterson, executive director of the Peter G. Peterson Institute, which promotes responsible public spending, said in a statement.

TREND FORECAST: What was not noted is that the higher interest rates rise, the more it will cost to service the debt!

The last time the budget was balanced was in the mid-1990s when the U.S. Congress cut spending and raised taxes. 

The yearly deficit will not shrink until politicians on both sides are willing to let go of their dogmatic positions that social spending can never be cut, the military must gobble ever more money, and the qualifying age for Medicare and Social Security can never be raised.

The current crop of politicians will never do that.

The responsibility for closing the budget hole lies with voters, who must support candidates willing to anger cherished constituencies in order to get the American fiscal house in order.

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