Debt, Debt and More Debt
Published in der Tagesspiegel
(Germany) on 15 February 2011
by Christoph von Marschall (link to original)
America’s national debt jumps to record levels with each budget year. An end to the upward debt spiral is nowhere in sight.
Both major U.S. political parties have an eye on the coming 2012 presidential election, so both parties hesitate to take substantial measures to cut spending or to increase revenues. The latest budget President Obama presented to Congress on Monday shows expenditures totaling $4 trillion with a deficit of $1.6 trillion, a new record. The Republican majority in Congress, meanwhile, advises that a supplementary budget for the current fiscal year will be necessary because the expected deficit of $1.3 trillion has been revised upwards to $1.48 trillion.
That equates to more than one-third of the $3.83 trillion 2011 budget and over 10 percent of the GDP. Republicans are calling for cuts in programs that support the poorer classes, among them subsidies for school lunches and educational assistance.
By May at the latest, the United States will reach the statutory debt limit of $14.3 trillion. That figure is 100 percent of the GDP. Should Congress fail to raise that ceiling, it will only be able to spend as much as it takes in, and it will be prohibited from borrowing further amounts. That would result in significant cuts for the states.
Despite this dramatic situation, both parties have thus far proposed only cosmetic savings that exclude the three largest budgetary items, namely, Medicare, which provides health care services to those over 65 years of age, Social Security, the basic government pension that has to be supported by ever-increasing payments from tax revenues because people are living longer, and, finally, the military, despite the fact that the United States spends more on defense than the next 25 nations combined. Obama has proposed that the defense budget will increase commensurate with the rate of inflation.
In 2010, Obama commissioned a bipartisan debt commission but did not include its recommendations in his current budget. It recommended drastic cuts in federal outlays and significant tax increases, for example on gasoline and other forms of energy. Exploding Social Security and Medicare costs are to be limited by a demographic factor.
Many Republicans, especially those new congressional members from the tea party, give the impression that all the country needs to do is eliminate the “waste” in foreign aid and domestic social programs. The cuts they recommend would significantly impact the recipients of those services but wouldn’t do much to reduce the deficit. The areas in which they propose cuts only make up 15 percent of the entire budget.
Both major U.S. political parties have an eye on the coming 2012 presidential election, so both parties hesitate to take substantial measures to cut spending or to increase revenues. The latest budget President Obama presented to Congress on Monday shows expenditures totaling $4 trillion with a deficit of $1.6 trillion, a new record. The Republican majority in Congress, meanwhile, advises that a supplementary budget for the current fiscal year will be necessary because the expected deficit of $1.3 trillion has been revised upwards to $1.48 trillion.
That equates to more than one-third of the $3.83 trillion 2011 budget and over 10 percent of the GDP. Republicans are calling for cuts in programs that support the poorer classes, among them subsidies for school lunches and educational assistance.
By May at the latest, the United States will reach the statutory debt limit of $14.3 trillion. That figure is 100 percent of the GDP. Should Congress fail to raise that ceiling, it will only be able to spend as much as it takes in, and it will be prohibited from borrowing further amounts. That would result in significant cuts for the states.
Despite this dramatic situation, both parties have thus far proposed only cosmetic savings that exclude the three largest budgetary items, namely, Medicare, which provides health care services to those over 65 years of age, Social Security, the basic government pension that has to be supported by ever-increasing payments from tax revenues because people are living longer, and, finally, the military, despite the fact that the United States spends more on defense than the next 25 nations combined. Obama has proposed that the defense budget will increase commensurate with the rate of inflation.
In 2010, Obama commissioned a bipartisan debt commission but did not include its recommendations in his current budget. It recommended drastic cuts in federal outlays and significant tax increases, for example on gasoline and other forms of energy. Exploding Social Security and Medicare costs are to be limited by a demographic factor.
Many Republicans, especially those new congressional members from the tea party, give the impression that all the country needs to do is eliminate the “waste” in foreign aid and domestic social programs. The cuts they recommend would significantly impact the recipients of those services but wouldn’t do much to reduce the deficit. The areas in which they propose cuts only make up 15 percent of the entire budget.