06/25/2024
The Congressional Budget Office (CBO) just released their update to the “Budget and Economic Outlook” for the next ten year period. It goes through the many categories of the budget, the forecast metrics and all that detailed stuff many of you non accountant types might find boring. But I suggest you at least skim through it as it’s a non partisan publication on a very complicated subject that affects you, your children and your grandchildren very much.
I’ve extricated the section on National Debt which if you know me, is a subject near and dear to me so you can read it. Basically, our national debt is forecasted to go from its current $34 trillion dollar amount to $56 trillion dollars over the next 10 years. That’s basically over spending by $2 trillion dollars per year. That’s PLANNED deficits - and you know over the last 25 years there was only one year where we did not go over budget and add to the deficit. 1 in 25!! With wars looming ever closer, trade and actual, we would be doing good if this plan was even close but wars are expensive (look at post 9/11) in the attached picture.
I heard something the other day that our spending is similar to alcoholism. We’re addicted to it - the spending makes us all feel good, infrastructure happens, the markets go up, the economy expands, people generally feel good. A euphoria. Like maybe after a glass of wine or two or five. But the next day, you have a little hangover and you don’t feel so good as the consequences of spending (inflation) happen. Unfortunately, the cure that happens most is more drinking to keep that euphoria going to keep us all happy. But we all know where it will eventually end. In detox, or death. If we don’t get our deficits under control that’s what will happen - default, hyperinflation, death of our civilization as we know it. I know, I know - doom and gloom. Who wants to hear that or much less believe it will happen. Not to us, not to the greatest nation on earth ever.
I don’t know the way out of our debt spiral - I’ve read some about taxing this and that, curtailing mandatory expenditures (Social Security) or some combination of those. But honestly, I don’t believe any politician of any political party will ever have the fortitude or backing to put the hammer down and put us on a path to not only stop the growth of the national debt but begin to pay it off. It’s too painful and we don’t like hangovers. We like the euphoria.
Here’s the excerpt from the report I linked below.
Debt
The deficits projected in CBO’s baseline would increase federal debt held by the public, which consists mostly of securities the Treasury issues to raise cash to fund the federal government’s activities and to pay off its maturing liabilities. The increase in federal debt each year is determined primarily by the annual budget deficit.
After accounting for all the federal government’s borrowing needs, CBO projects that debt held by the public would rise from $26.2 trillion at the end of 2023 to $50.7 trillion at the end of 2034 (see Table 1-3). As a percentage of GDP, debt is projected to reach 109 percent in 2028, an amount greater than at any point in the nation’s history. Debt would continue increasing over the remainder of the projection period, equaling 122 percent of GDP at the end of 2034—about 25 percentage points larger than it was at the end of 2023 and two and a half times its average percentage over the past 50 years.
https://www.cbo.gov/publication/60419
