U.S. National debt crisis

The following article appeared in the February 15, 2010 edition of The Tacoma News Tribune. The author is Tom Raum of The Associated Press. : "It's bad enough that Greece's debt problems have rattled global financial markets. In the world's largest economic and military power, there's a far more serious debt dilemma.

For the U.S., the crushing weight of its debt threatens to overwhelm everything the federal government does, even in the short-term, best-case financial scenario- a full recovery and a return to prerecession employment levels.

The government already has made so many promises to so many expanding "mandatory" programs. Just keeping these commitments, without major changes in taxing and spending, will lead to deficits that cannot be sustained.

Take social security, Medicare and other benefits. Add in interest payments on a national debt that now exceeds $12.3 trillion. It all will gobble up 80 percent of all federal revenues by 2020, government economists project.

That doesn't leave room for much else. What's left is the entire rest of the government, including military and homeland security spending, which has been protected and nurtured by the White House and Congress, regardless of the party in power.

Moody's Investors Service recently warned that Washington's credit rating could be in jeopardy, if the nation's finances didn't improve.

Despite election-year political pressure from voters for lawmakers to restrain spending, some recent votes suggests that Congress, left to its devices, probably isn't up to the task of trimming deficits. Both the Obama administration and Democratic leaders have put job creation ahead og deficit reduction for now.

The Senate faces an important vote after it returns Feb. 22 from its Presidents Day recess on a bill intended to stimulate job growth. The legislation offers a $13 billion payroll tax credit for companies that hire unemployed workers, including an additional $1,000 tax credit for workers retained for a full year.

Proposed belt-tightening steps by President Obama, including a freeze on some nondefense, nonentitlement spending, would make only a small dent in the mountain of debt.

The budget he submitted to Congress this month proposes record spending of $3.8 trillion for 2011. Taxes in next year's budget will support only $2.5 trillion of that spending, leaving 1.3 trillion to be borrowed.

The president's budget is a best-case outlook, from the administration's vantage point.

It doesn't take into account future liabilities from the growth of entitlement benefits and is based on projected economic growth that depends on a solid recovery. It assumes Congress will pass all of Obama's initiatives, including spending cuts and tax increases previously rejected by Congress

Congress already has rejected a bi-partisan deficit commision that could have forced some painful steps on tax increases and entitlements."


My Comment: For decades, politicians in both partys have used government spending and tax cuts to maintain power. The federal deficit and the national debt are the legacy of these political decisions. There is no will to cut programs or raise taxes to help balance the budget because it will hurt a polticians chance for re-election. At the present time, with our current political system. I see very little chance for a balanced federal budget.