U.S. debt climbing on Congress’ watch
Members of Congress have been quick to wag a finger at the heads of auto companies, big banks and other private firms, accusing them of mismanagement because their spending greatly exceeded their revenues.
But what about the incredible run-up in debt we’re seeing Congress approve?
The Washington Times reported this week on a bipartisan commission of fiscal analysts, warning that U.S. debt is growing so rapidly, it threatens a fiscal crisis if not reversed.
The commission’s members include former members of Congress, former heads of the Office of Management and Budget, the Congressional Budget Office, the Government Accountability Office and other fiscal analysts.
The group’s report says U.S. debt is rising way too fast and too high, and could reach 85 percent of GDP by 2018, 100 percent by 2022 and 200 percent by 2038.
But it says, before the debt would reach such high levels, “… the United States would almost certainly experience a debt-driven crisis …”
The Peterson-Pew report warns that “a loss of confidence by international creditors could precipitate a financial crisis.”
The U.S. situation was likened to one that hit Mexico in 1995, which caused a devaluation of the peso, from which Mexico still hasn’t recovered.
In the past year, the U.S. debt has risen from 41 percent of GDP to 53 percent, a nearly 30 percent increase. In 1981, the public debt was 26 percent of GDP.
The Times reported that foreign investors held only 5 percent of the U.S. public debt of $283 billion in 1970. Foreign investors own nearly half of today’s $7.7 trillion public debt, with China the largest foreign creditor.
The Peterson-Pew commission is calling for Congress and the president to develop special debt-stabilization legislation for 2010 to limit debt to 60 percent of GDP by 2018, no doubt driven by tax increases and spending cuts. And if an annual debt target was missed, there needs to be “debt triggers” that automatically cut spending and increase taxes to keep the targets on track.
The debt-to-GDP ratio is close to exploding, the Times reports a Brookings Institution scholar with saying.
Senate Democrat Evan Bayh of Indiana says the president needs to veto the spending bill Congress passed this past weekend, and “take the credit card away from the politicians who just want to spend, spend, spend.”
The warnings of overspending continue to be dire. Is anyone paying attention?
– The Daily Iberian, New Iberia, La.