We are forecast to have at minimum $24,000,000,000,000 ($24 Trillion) in debt by 2023. When interest rates return to the long term average of 4.5%, as eventually they will from the artificially low rates today, interest payments on this massive federal debt will be $1 Trillion a year. It’s absurd politically and ruinous economically. It won’t happen because we will break politically and economically before we get there. Obama has set us up for a truly existential crisis, on par with what Spain and Italy are going through today.
That, put short and sweet, is the Obama Legacy. It’s not an artifact of the Bush years any longer, and in fact it never was. The President has refused every attempt to rationalize the federal budget. He now appears content to let the Federal Reserve just print money to pay for runaway deficits until that, too, creates more harm than good … as printing money always does. Bastardizing the currency has never in history saved a spendthrift nation from ruin.
No, this is Obama’s economy now, it’s his legacy now, and it’s headed into a black hole.
The story is simple really. This graphic shows what the non-partisan Congressional Budget Office (CBO) was forecasting for budget deficits in late 2008. It’s a forecast for 2009 to 2020 based on the last budget passed by the Congress during the Bush presidency. The bailouts were included, so 2009 is forecast in this graphic to be a train wreck. Which of course it was. 2010 was expected to be little better, with 2011 showing some marginal improvement.
But look at 2012 and 2013. By 2012, seen from late 2008, we expected the deficits to be back in the “normal” range of $250 – 350 Billion. Moving out toward 2020 the budget stabilized and deficits continued to shrink a bit. That was the balance between tax receipts and expenditures that existed in 2008′s federal budget. “Normal” deficits were interrupted by the recession, yes … but they were recovered in three years.
This is the most recent, updated CBO forecast.
2009, 2010 and 2011 were bad, as expected. But compare 2012 to 2020 in both graphics. Notice the difference? The deficit in 2012 was almost $1 Trillion more than the $300 Billion that had been forecast just three years prior. And every dollar of that $1 Trillion was new spending Obama and the Democrats initiated in 2009 and 2010 when they had total control of the government.
The worst part is that from 2015 to 2020 and beyond deficits are expanding rather than contracting; headed the wrong way. By 2020 we are back to running annual deficits of more than $1 Trillion. Forever.
ObamaCare, several “stimulus” packages, massive increases in welfare programs, social security tax holidays, “cash for clunkers”, the “War on Carbon”, massive subsidies to favored industries like wind and solar. The spending list is endless. Out to 2020 that list totals to about $7 Trillion in additional baseline deficits and debt that have sprung up from programs passed during the Obama presidency, deficits that did not exist in CBO forecasts prior to his inauguration in January 2009.
If you are among the many wondering what the government shutdown and the fight over raising the debt ceiling are all about, take another long look at those two graphics above. Then consider this:
Europe is not all that far away geographically, politically and economically from where we in the US are today. The debt and deficit crisis pounding Europe is what we face if we don’t get our federal budget under control.
The battle of the budget must be fought sooner or later. It can’t be avoided forever. I prefer much sooner. If Olympus must fall, bring it down now while there is still time to repair and reset Social Security, Medicare and all the rest; while there is still time to work our way out of the disaster we are making for ourselves; to avoid becoming Italy or Japan.
If we don’t act soon, if we follow Obama and the Democrats into that black hole, this will be the sign hung on America’s door.