Borrowing toward financial disaster

Image that you had to borrow 30 percent of what you spend every year just to pay

the mortgage, buy groceries, heat your home and the rest of the expenses? Say you spend $80,000 on expenses, but all you earned each year was $48,000. That means that each year that you would have to borrow $32,000 a year just to stay even. How long could you continue to live like that?

But that's what the federal government is doing. The budget that President Barack Obama recently unveiled has $3.8 trillion in expenditures and $2.6 trillion in revenues. To just stay in business, the government has to borrow about 30 percent of what it spends. How long can this continue?  
Alice Rivlin (above right), co-chair of the BiPartisan Policy Center Debt Reduction Task Force and past director of the Bureau of the Budget, recently put it this way:

On any reasonable set of economic assumptions, the U.S. budget is on an unsustainable track. There is no disagreement among the Office of Management and Budget (OMB), the Congressional Budget Office (CBO), The Government  Accountability  Office (GAO), and leading private forecasters on where the budget is headed if we do not change course. In the next decade and beyond, federal spending, driven by the impact of an aging population and rising health care costs on Medicare, Medicaid, and Social Security, will rise substantially faster than the whole economy can grow--faster than the GDP. Revenues, at any likely set of tax rates, will grow only slightly faster than the GDP. The gap between spending and revenues will keep widening. 

The growing deficit will be more and more difficult and expensive to finance. Ultimately, we will not be able to borrow enough to finance the widening gap between spending and revenues. [Emphasis added[


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  • Again,we as common citizens can see the train leaving the tracks here.These people never operated a lemonade stand and are driving us over the financial cliff.We can no longer trust our leaders because they don't know how to lead.We need new blood,anyone other than the powers to be...................

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