Government
How the Federal Debt Is Drowning the U.S. Economy in Red Ink
For first time since World War II, debt exceeds GDP, but McDonald's is on the rise
Around the State
The 2011 budget deal brokered by Democrats and Republicans is pushing the national debt to a level that exceeds the entire U.S. economy.
A latest Treasury report predicts that the national debt will be 102 percent of the country's gross domestic product before this year is over. The last time debt surpassed GDP was during World War II.
One of the key debt drivers was last December's Capitol Hill budget deal, which added an estimated $858 billion to federal deficits over a decade. Some $410 billion is being piled on this year alone, said the Congressional Budget Office.
While liberals blame the rising red ink on the extension of the Bush-era tax rates -- a policy that President Barack Obama and Democratic negotiators agreed to last year -- conservatives say continued government spending plays a bigger role in the spiraling costs.
U.S. Rep. Dave Camp, the lead tax writer in the House, told the Chicago Tribune this week that the latest Treasury numbers are a clear indication “why any increase in the debt limit must be paired with significant spending reductions and real entitlement reforms.“
Most recently, however, the Obama administration proposed a $2.4 trillion increase in the $14.6 trillion debt limit without any spending cuts. That proposal was roundly rejected by the Republican-controlled House.
Though Treasury Secretary Timothy Geithner and Wall Street financiers warn that the United States will lurch into default this summer unless Congress raises the debt limit, GOP leaders insist on "significant" budget cuts as a precondition for any lifting of the ceiling.
The debt-to-GDP ratio is more than statistical esoterica.
After examining data from dozens of countries over two centuries, economists Ken Rogoff and Carmen Reinhart found that when a nation's gross debt reaches 90 percent of its economy, it often loses about 1 percentage point of growth a year.
Despite the White House's claims of economic recovery, the U.S. private sector continues to slump and shrink amid rising debt. As the nation's unemployment rate rose again last month, up to 30,000 of the paltry 54,000 new hires were in minimum-wage seasonal positions at McDonald's, according to Morgan Stanley.
Meanwhile, Washington has been operating on a patchwork series of continuing spending resolutions. The Democratic-led Senate has neither proposed nor approved an actual budget in more than two years.
George LeMieux, a Florida Republican who is seeking to return to the Senate after serving there on an interim basis for 19 months, said, "It's astounding to think that all the work being done by Americans, and every single ounce of output, will be surpassed by the debt."
LeMieux, who has proposed a budget that takes federal spending back to 2007 levels, noted that outlays in the past 2 1/2 years totaled more than the eight previous years combined.
After Democrats suffered what Obama called a "shellacking" last November, conservatives are hopeful that a strict budget-cutting message will yield more victories in 2012.
"Let's be clear, the Democrat Party is not interested in a fiscally strong America," said Patricia Sullivan, head of the Florida Tea Party Network, a coalition of 69 tea parties around the state.
"The current administration has exploded entitlement programs in an effort to be 'compassionate,' but with certitude I can say debt is not compassionate."
For starters, Sullivan said she favors repealing the federal health-care law as part of any debt-ceiling adjustment.
Other tea partiers -- and even some newly elected Republicans -- see Washington's fiscal dithering as a bipartisan problem.
U.S. Rep. Allen West, R-Plantation, said, "If we continue down the road of subsequent two-week CRs (continuing resolutions), there’s more uncertainty, more unpredictability."
Likening Congress's near-shutdown of the government earlier this year to a "Greek tragedy," West blamed "political gamesmanship" on the Hill and at the White House.
A latest Treasury report predicts that the national debt will be 102 percent of the country's gross domestic product before this year is over. The last time debt surpassed GDP was during World War II.
One of the key debt drivers was last December's Capitol Hill budget deal, which added an estimated $858 billion to federal deficits over a decade. Some $410 billion is being piled on this year alone, said the Congressional Budget Office.
While liberals blame the rising red ink on the extension of the Bush-era tax rates -- a policy that President Barack Obama and Democratic negotiators agreed to last year -- conservatives say continued government spending plays a bigger role in the spiraling costs.
U.S. Rep. Dave Camp, the lead tax writer in the House, told the Chicago Tribune this week that the latest Treasury numbers are a clear indication “why any increase in the debt limit must be paired with significant spending reductions and real entitlement reforms.“
Most recently, however, the Obama administration proposed a $2.4 trillion increase in the $14.6 trillion debt limit without any spending cuts. That proposal was roundly rejected by the Republican-controlled House.
Though Treasury Secretary Timothy Geithner and Wall Street financiers warn that the United States will lurch into default this summer unless Congress raises the debt limit, GOP leaders insist on "significant" budget cuts as a precondition for any lifting of the ceiling.
The debt-to-GDP ratio is more than statistical esoterica.
After examining data from dozens of countries over two centuries, economists Ken Rogoff and Carmen Reinhart found that when a nation's gross debt reaches 90 percent of its economy, it often loses about 1 percentage point of growth a year.
Despite the White House's claims of economic recovery, the U.S. private sector continues to slump and shrink amid rising debt. As the nation's unemployment rate rose again last month, up to 30,000 of the paltry 54,000 new hires were in minimum-wage seasonal positions at McDonald's, according to Morgan Stanley.
Meanwhile, Washington has been operating on a patchwork series of continuing spending resolutions. The Democratic-led Senate has neither proposed nor approved an actual budget in more than two years.
George LeMieux, a Florida Republican who is seeking to return to the Senate after serving there on an interim basis for 19 months, said, "It's astounding to think that all the work being done by Americans, and every single ounce of output, will be surpassed by the debt."
LeMieux, who has proposed a budget that takes federal spending back to 2007 levels, noted that outlays in the past 2 1/2 years totaled more than the eight previous years combined.
After Democrats suffered what Obama called a "shellacking" last November, conservatives are hopeful that a strict budget-cutting message will yield more victories in 2012.
"Let's be clear, the Democrat Party is not interested in a fiscally strong America," said Patricia Sullivan, head of the Florida Tea Party Network, a coalition of 69 tea parties around the state.
"The current administration has exploded entitlement programs in an effort to be 'compassionate,' but with certitude I can say debt is not compassionate."
For starters, Sullivan said she favors repealing the federal health-care law as part of any debt-ceiling adjustment.
Other tea partiers -- and even some newly elected Republicans -- see Washington's fiscal dithering as a bipartisan problem.
U.S. Rep. Allen West, R-Plantation, said, "If we continue down the road of subsequent two-week CRs (continuing resolutions), there’s more uncertainty, more unpredictability."
Likening Congress's near-shutdown of the government earlier this year to a "Greek tragedy," West blamed "political gamesmanship" on the Hill and at the White House.


Comments (5)
Feel free to contact me and I will walk you through it. For all I know, Fox used my analysis as it was provided to multiple elected officials and their staffers.
Henry Kelley
legislative@fwbteaparty.com
I agree. There are an awful lot of people out there who could- and should be contributing to the tax base- but aren't.
Of course, they shouldn't be allowed to bring in more taxes if they don't cut the spending. Just like the family who has to cut up their credit cards, it'll be be painful for a while, but we'll emerge the better for it.
Having said that, I find it strange that the American people believe the Democrats on anything relating to the budget as they have been in control of the purse strings since 2006. Now that the Republicans are in control they better believe they are being looked at through a microscope.
Now for LeMieux and rolling back to 2007 spending. How about just taking a look at the tax money coming in and say we are going to spend no more that what we receive? Maybe less and use the excess to pay down the principle of this monster $14.3 trillion debt we have placed upon the backs of future generations. Nope, that would make sense.
Feel free to contact me and I will walk you through it. For all I know, Fox used my analysis as it was provided to multiple elected officials and their staffers.
Henry Kelley
legislative@fwbteaparty.com
Feel free to contact me and I will walk you through it. For all I know, Fox used my analysis as it was provided to multiple elected officials and their staffers.
Henry Kelley
legislative@fwbteaparty.com