CBO says debt will reach 62 percent of GDP by year's end

[The Northerner]

Source: The Hill

The national debt will reach 62 percent of gross domestic product (GDP) by the end of this year, the nonpartisan Congressional Budget Office (CBO) said on Wednesday.

The budget office said the debt will reach its highest percentage of GDP since the end of World War II. The jump is driven by lower tax revenues and higher federal spending in the recent recession.

And while the national debt would stabilize at 67 percent of GDP over the next decade if current law were maintained, extending tax cuts enacted during the administration of President George W. Bush and keeping growth in appropriations in line with inflation would mean that the debt would reach almost 90 percent of GDP by 2020.

By contrast, GDP has averaged "a little above" 36 percent per year over the past 40 years.

The report comes as President Barack Obama's fiscal commission meets again on Wednesday to work on crafting solutions to reining in deficits and the debt over time.

Read more: http://thehill.com/blogs/blog-briefing-room/news/106355...

[county worker]

1. End the wars, cut defense spending, do not renew the Bush tax cuts,

Bring back the inheritance tax, raise the tax rates on those who got the breaks, start a jobs program. Do it all through reconciliation and Presidential order.

Those reports are to get us to go along with cutting social security, medicare, bust unions and lower salaries. Basically it is a ploy to shrink the middle class. Don't buy into it.

We can solve the problem very easily without hurting the middle class and the poor.

[Braulio]

4. I agree, but.....

This should be done via Congressional vote and President's approval. I don't see why we can't cut "defense" spending when most of it is meant to attack other countries anyway. We can beef up the Border Patrol, Coast Guard, and National Guard, and cut the professional services in half. But I would also cut a bunch of other spending. For example, cut the Department of Education to half the size. They don't do much.

[county worker]

6. That would be good but I don't see us with a majority getting the simplest things done.

Every bill passed is watered down to get bipartisanship. They are so week as to be a fix in name only. The repubs never did that and they had a smaller majority.

[No Elephants]

If bills are watered down for bipartisanship, why are bills passed by

reconciliation watered down?

[county worker]

9. reconciliation is a way to put back meaningful fixes in the bills

We could have gotten a public option with the HCR act in reconciliation if we worked hard enough at it.

[Arkana]

7. They also voted with a hivemind and had a unitary executive

who treated them as a rubber stamp.

The curse of being a Democrat--you have to actually think about your opinions.

[county worker]

10. Any one of us could make a list of the things that need to be done to protect

the middle class. Any congress critter could make a list as to why that is important. It doesn't take much thinking to figure either out. Real opinions in the Congress are rare but ideological and corporate sponsored thinking are not opinions.

[Soylent Brice]

14. K&R your comment.

[DJ13]

2. The wealthy have been getting trillions in support the last several years

So lets make sure we cut the benefits to the poor and elderly so we can pay for it.

[OhioChick]

3. End the wars, for starters n/t

[On the Road]

5. 62% is Not the End of the World

I actually thought it had gotten higher in the last several years. Most developed coutries are in worse shape.

That means there's a little more room for additional stimulus. With the banks still not lending, it looks like that will be necessary.

[No Elephants]

8. The prevalence of the problem does not make this news any less bad.

[ProudDad]

11. Funny Money in the Ponzi scheme debt based "economy"...who cares?

Think outside the capitalist box...

http://steadystate.org /
www.transitionus.org
http://www.postcarbon.org /
http://www.relocalization.net /
http://www.radicalrelocalization.com /

[eilen]

16. Thanks so much for the links

They were very inspiring. Do you go anywhere besides DU to talk about the topics of these websites?

[Kelvin Mace]

12. Correct me if I am wrong

But during and after WW-II, I believe the number exceeded 100% of the GDP, and we certainly NEVER recovered from that.

[bossy22]

13. the number exceeded 150% to be exact

i think its funny how people think we are going to collapse under our debt, but japan whose debt to GDP ratio is over 200% is in perfectly fine fiscal shape

can you say tea party scare tactics anyone?

[melm00se]

18. yes it was

but the world was so incredibly different from an economic landscape point of view back then.

Post WWII, the USA had the only undamaged industrial base and most of western europe and the far east were completely devastated. They were completely "open" markets for the products being churned out by US industries: steel, finished industrial goods, consumer goods and the like.

The tax rates that get pointed to here (and other places) as examples of why "the rich" can afford higher tax rates actually acted as a cooling mechanism to prevent the US economy from overheating (that and the GI Bill which eased returning soldiers back into the economy rather than dumping them back in post WWI and the economic havoc that wreaked).

Once the rest of western Europe and the Far East got "caught up" and their economies returned to some semblance of normality and a more competitive economic environment the huge taxes of the 40's and 50's had to be scaled back (which JFK did) to maintain a competitive balance with these re-emerging economies.

Fast forward to today: "everyone" has a relatively modern and healthy economic infrastructure (China having the most room to grow in that regard) so competition is continuing to heat up.

As to the comment about the Japanese and their Debt to GDP ratio being much higher yet they are in decent economic shape? HA!

their economic growth has been going up and down like the roller coast from hell.



and where this graph leaves off their economic ups and downs have swung from +6% growth to -16% growth.

then you couple in the deflation occurring in Japan:



(the upward tick at the end of the graph was only temporary as evidenced by the numerous articles in the news, the most recent one here: http://www.reuters.com/article/idUSTOE66006Y20100701 )

the Japanese economy is a real mess, it's just that it's an "out of sight, out of mind" situation.

[grahamhgreen]

15. End the wars for profit. Bring back the 94% tax bracket on the ulta-rich - they can afford it.

[rayofreason]

17. Only economic growth...

...can resolve this issue on the long run. Policies that are anti-growth are the enemy of ordinary people. Pro-growth is pro-people.