The Congressional Budget Office informed Congress this week that the growing budget deficits will cause debt to rise to unsupportable levels, eventually reaching an undetermined tipping point that will cause another financial crisis.
As of now, federal debt stands at 62% of GDP. The last time it exceeded 50% was during and after World War II. The debt grew significantly during the Bush administration, but the greatest increase came in the last two years, since the Obama administration has taken office. The debt currently stands at $13 trillion, primarily due to government spending and declining revenues. While some economists claim that the spending was necessary to save millions of jobs, it has made it our government less capable of responding to another crisis, perhaps even one caused by our national debt.
The CBO report is bleak, noting that health care and social security spending will reach 80% of GDP by 2020. The debt ratio will be at 90% in 2020. By 2035, debt levels could be at “catastrophic levels.” Erskine Bowles, former chief of staff for the Clinton administration, compared the national debt to “a cancer.”
This report will likely lead to typical partisan bickering between higher taxes or less spending, but the reality is that, at some point, some hard choices about reducing the cost and size of government will need to be made. This is the choice that America needs to make. Will it work for the government, to pay off our debts or will it reduce the size of government to preserve the free market and our liberty?