Obama Massively Underestimates His Deficit; And By The Way, Federal Debt Will Raise To 90% Of GDP

Good afternoon, America.  You each owe $10,000 more than the government thought you did yesterday.  Hope that doesn’t bother anybody.

Barack Obama is leading the United States of America straight down to hell.  And it will be completely broke and massively in debt when we get there:

CBO report: Debt will rise to 90% of GDP
Friday, March 26, 2010
By David M. Dickson

President Obama’s fiscal 2011 budget will generate nearly $10 trillion in cumulative budget deficits over the next 10 years, $1.2 trillion more than the administration projected, and raise the federal debt to 90 percent of the nation’s economic output by 2020, the Congressional Budget Office reported Thursday.

In its 2011 budget, which the White House Office of Management and Budget (OMB) released Feb. 1, the administration projected a 10-year deficit total of $8.53 trillion. After looking it over, CBO said in its final analysis, released Thursday, that the president’s budget would generate a combined $9.75 trillion in deficits over the next decade.

“An additional $1.2 trillion in debt dumped on [GDP] to our children makes a huge difference,” said Brian Riedl, a budget analyst at the conservative Heritage Foundation. “That represents an additional debt of $10,000 per household above and beyond the federal debt they are already carrying.”

The federal public debt, which was $6.3 trillion ($56,000 per household) when Mr. Obama entered office amid an economic crisis, totals $8.2 trillion ($72,000 per household) today, and it’s headed toward $20.3 trillion (more than $170,000 per household) in 2020, according to CBO’s deficit estimates.

That figure would equal 90 percent of the estimated gross domestic product in 2020, up from 40 percent at the end of fiscal 2008. By comparison, America’s debt-to-GDP ratio peaked at 109 percent at the end of World War II, while the ratio for economically troubled Greece hit 115 percent last year.

“That level of debt is extremely problematic, particularly given the upward debt path beyond the 10-year budget window,” said Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget.

For countries with debt-to-GDP ratios “above 90 percent, median growth rates fall by 1 percent, and average growth falls considerably more,” according to a recent research paper by economists Kenneth S. Rogoff of Harvard and Carmen M. Reinhart of the University of Maryland.

CBO projected the 2011 deficit will be $1.34 trillion, not much different from the administration’s estimate of $1.27 trillion. However, CBO’s estimate of the 2020 deficit at $1.25 trillion significantly exceeds the administration’s $1 trillion estimate.

Just so you know, a few things were different at the end of World War II than they are now.  For one thing, who held the U.S. debt back then?  The American people, who had purchased savings bonds, war bonds, and the like.  When the government began paying those debts with interest, it was paying American citizens who invested that money back in the U.S. economy.

Not so now.  Now we owe China and Japan and other foreign countries.  It’s foreign investment; and foreigners will reap the rewards at our children’s expense.

A second thing is a corollary to the first.  We used to be a nation of savers.  Now we’re a nation of spenders.  We’ve got no resources saved up for tough times.  The moment we have an economic slowdown, people can’t pay their mortgages or their bills and everything goes to hell.

Third, we actually PRODUCED something at the end of WW II.  In fact, we were the most productive nation with the most powerful industrial base in the history of the world back then.  Now?  We basically don’t build anything any more.  Now our economy is based primarily on consuming what others build.

And fourth, that apex of debt at the end of WWII occurred BECAUSE of WWII.  We went into debt because of a war against the most evil regimes in the history of the planet.  And after we won that war, we went back to normal, and started quickly bringing our debt level down.

Now it’s just the opposite.  Our debt level is skyrocketing, but it isn’t do to a historic event; it’s just do to the fact that our government consists of spending addicts and we’re spending and spending and spending with no responsibility to the present or foresight for the future.

We are so screwed.  We WILL have a Great Depression that will make the last one look like a Love Boat cruise.  The only question is how far we can string our insanity along until reality takes over and we implode.

And what does our current administration have to say about it?

How ’bout if we spend a few trillion more taking over the health care system?

Tags: 2011 budget, CBO, debt, debt will rise to 90% of GDP, debt-to-GDP ratio, deficit, GDP, health care, Obama administration, report