Yes, we do have a debt problem: the president and his supporters try to downplay the continuing crisis.

Authorde Rugy, Veronique
PositionColumns - President Barack Obama's attitude on the budget deficit - Column

IN MID-MAY, the Congressional Budget Office (CBO) revised its previous estimate of the federal government's 2013 deficit downward by 24 percent. The fiscal year (which ends on September 30) will feature red ink of merely $642 billion, down from the $1 trillion-plus of the previous four years, said the CBO. For many Democrats, this proved what they knew all along: The national debt is not a clear and present threat.

"We don't have an immediate crisis in terms of debt," President Barack Obama declared in an ABC News interview in March. "In fact, for the next IO years, it's going to be in a sustainable place." In the same month and venue, Republican Speaker of the House John Boehner (Ohio) joined the president in a rare moment of agreement: "We do not have an immediate debt crisis, Boehner claimed.

This attitude is reminiscent of the yarn about a man jumping off the roof of a 10-story building and, around the third floor, saying, "Everything looks fine so far!"

After years of bipartisan overspending, public debt today--that's the money that the federal government owes to domestic and foreign investors--is almost 90 percent higher than at the onset of the financial crisis in 2008. It climbed by $1 trillion dollars between December 2011 and December 2012 alone to its current level of $12.03 trillion, according to the CBO in May. Public debt is now 75.1 percent of GDP, the highest level since 1950 and it is projected to reach 76.2 percent next year.

And things won't improve much in the next o years.Assuming current laws, the CBO projects that the debt is scheduled to grow to $19.07 trillion by 2023, or 73.6 percent of projected GDP. To put that number in perspective, in its February report the CBO reminded policymakers that "as recently as the end of 2007, federal debt equaled just 36 percent of GDP."

If Congress changes current law and reverses the March I spending cuts forced through sequestration, the projections get even more dire, with debt held by the public rising to 83 percent of GDP, the CBO projects. And those numbers don't tell the whole story: Add in the debt that the government owes to other accounts (such as Social Security), and gross federal debt right now totals $17 trillion--or 106 percent of GDP.

And even these dire debt numbers pale in comparison to the magnitude of current unfunded liabilities. According to the Financial Statement of the United States, which looks at the government's net financial position, as of 2012 the...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT