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As Matthew Clemente pointed out in his last entry, the national debt will surpass GDP as soon as 2012. Unfortunately, it gets more frightening—according to the 2008 Financial Report of the U.S. Government, the government has already promised $65 trillion in Medicare and Social Security—more than the GDP of the entire world. Even this figure is already outdated: consider the additional promised payouts with the passing of the healthcare bill. The deficit has already increased a trillion dollars since Obama took office, and his projected plan will add 9.3 trillion in the next decade.
There are no funds held in reserve to pay for Social Security and Medicare, and these programs already have expenditures greater than their revenues since this year and 2008, respectively. We’ve squandered billions on a stimulus package that yielded no results. And now the new healthcare system will absorb vast sums of money—if there’s even any left to borrow. Obama has offered strong rhetoric and weak policies: tax hikes and tiny budget cuts may temporarily appease fiscal conservatives, but they will not do anything to decrease our black-hole of a deficit.
The national debt consistently takes a backseat to other news; but disasters like oil spills and European financial meltdowns have a lot to do with our deficit. We rage at our government for not knowing how to stop oil gushing into the ocean, but more often than not, that same rage is absent when discussing federal spending, something over which the federal government presumably has full control. We witness complete fiscal disasters in foreign countries, but assume that we are somehow immune. The false sense of immunity will disappear within the next generation unless dramatic action to restore fiscal responsibility is taken immediately.
Many have suggested that the United States is not at risk of becoming the next Greece, because of the confidence lenders have in investing in our country. These perceptions can change unbelievably fast, and excessive federal spending can encourage lenders to invest their money elsewhere. The United States is not out of the woods yet, and without a return to fiscal responsibility, Americans may pay a stiff price for the government’s spending spree.