Sunday, December 4, 2011
I've met many people who don't know what the difference is between the national debt and the budget deficit.
The debt is the amount of money that we have borrowed over the years and still need to pay back. Currently the debt is about $15 trillion, or roughly 100 percent of GDP. By the way, just the interest payment on the national debt this year is about $454 billion.
The deficit is the amount of borrowed money the U.S. government spends each year. This year the deficit is about $1.3 trillion. To put this in perspective, the Super Committee failed to come to a consensus on how to cut just $1.3 trillion from the deficit over 10 years.
Cutting $1.3 trillion over 10 years equals only $130 billion a year.
In other words, it was unable to slow down by just 10 percent the pace at which we are accumulating more debt!
Our financial ship, the Titanic, is going down, and some of us are rearranging deck chairs and believe that will keep the ship afloat. Others are bailing water with tea cups and arguing over the size of the cups. And there's no rescue boat out there. We're it.
How many decades will it take before all of our revenue won't be enough to make the interest payment on the debt? I've seen estimates of 15 to 20 years, but that was before our bond rating was lowered, increasing our interest rate. This is a matter of national security and autonomy like nothing else we've faced.
Let's wake up and accept the fact that the level of thinking that got us into this predicament will not be sufficient to get us out. We need to demand of our congressmen and congresswomen a plan that includes slashing spending while at the same time raising taxes on all of us.
I don't like that prospect, but I dread even more a certain colossal economic collapse.