With the current 106% debt-to-GDP ratio, there’s no doubt that today’s government debt is high. The last time the United States reached this mark, it was during the aftermath of WWII in the late 1940s.
But despite nearly historic debt levels, it does not seem that the national debt is a key issue for most citizens and groups. What drives this accumulation of debt in the long run, and at what point does the debt level become so high that it becomes an undeniable and critical issue for the country?
Today’s infographic comes from the Peter G. Peterson Foundation, a NYC-based group that focuses on educating people about the fiscal challenges of growing government debt. The graphic illustrates the main factors driving the debt upwards, as well as the potential impact down the road.
Rising Temperatures
The trouble with debt is that it delays today’s challenges well into the future, making it a tempting short-term solution when other things aren’t working. However, over time, that burden increases steadily, and the situation quickly represents the “frog and boiling water” parable.
So what’s raising the temperature of that water?
Right now, the aging of the Baby Boomers is a key factor, and the amount of people receiving social security benefits will swell from 62 million to 88 million people by 2035. At the same time, Medicare’s hospital trust fund will run out of money by 2029, and the program will only remain solvent until 2034.
Whether it’s the growing enrollment in these programs or the rapidly escalating costs of healthcare itself, more money will be put towards Social Security and healthcare over the coming years.
By about 2045, government spending on major health programs will nearly double in size to greater than 9% of GDP.
Boiling Water
Today, interest on the debt is equal to about 1.4% of GDP.
However, if the projected pace is maintained, it’s anticipated that interest payments could be equal to 6.2% of GDP by 2047 – this is roughly 2x the average annual amount the federal government spends on education, infrastructure, and R&D combined.
As economists will point out, the government controls the monetary supply and can easily “print” money to make these payments. This is absolutely true, but it also creates an array of other problems such as inflation and increasing distrust in the monetary system.
Though this boiling point looms further down the road, having a plan to cool the temperature (or to jump out of the water) could be a prudent one to keep in our back pockets.
Welfare is the root problem. Pay people not to work and they will not work. If they do not work, they do not produce. If they do not produce the economy stagnates. Consumption without production is not sustainable. And expecting an ever decreasing number of producers to support an ever increasing number of consuming non-producers is pure lunacy.
Pluto welfare comes first. What ignoble “founders” are about. Always.
https://www.youtube.com/watch?v=WvMTOUhKUh8
Money’s a melody, until the mutts unchain it, & chain up everything else they can. After that productivity ain’t got nowhere to go but ghost. And welfare’s got nowhere to go but trickle down.
Some trickles are faster damagers than others…but hitting the pace car, & wrecking it, is the whole point. Pluto’s just as perverse as pogo. Those two are continuous demolition derby.
Who downvoted that?
assuming you mean llpoh comment, star, i thought the same thing.
-and you get 6 more down votes at last count. wtf
must be some free shit army slugs lurking who have voting rights still.
I believe you mean socialism, but why do you care? You moved to the edge of civilization in an MMT state. Why don’t you tell us about how you stole profits from your workers for years to expat away from the Land of Life Liberty and the Pursuit of Happiness?
The bible says money is the root of all kinds of evil.
Judgemental much?
Go fuk yourself, much?
Good anal hygiene could improve your mood.
AD – pretty sure the Bible says no such thing. Dolt.
“For the love of money is a root of all kinds of evils.” (I Tim 6:10a)
Yep, that is right. It is not money, but the love of it. BIG difference.
Thanks for making my point.
If LLPOH paid his employees – and I am sure he did – then he didn’t “steal” profits; he earned them.
He runs the business, takes the risks, finds the talent, makes sure the bills and wages get paid, etc., etc., etc.
Fuck off, statist piece of shit.
Rdawg – paid them, still do. And some of them have gotten rich over the many years as a result of steady cashflow and their wise investment of it.
What an asshole – accuse me of stealing from my employees. Bet he is a parasite sucking on the welfare teat, and has never done a productive day’s work in his life.
You’re the parasite, big fucking difference.
Yeah a guy that gives jobs to people is a parasite. Fucking idiot.
Go fuck yourself, first.
Headwaters of the nile(ism?) feed downstream da’ nile. The shite, every bite, starts at the “top,” & gravity sucks it down into the basins, which evaporate continuously to resupply the top ∞. That’s the original cloud seed program from whence ‘sow the wind, reap the whirlwind’ comes. & stays.
http://www.mcescher.com/gallery/recognition-success/waterfall/
Yeah this is Bullshit. Social Security already went broke years ago. There are no “Trust Funds”. Those are UNFUNDED LIABILITIES that were looted in the past to finance the false “prosperity” of fake recoveries past.
The Interest is approaching the pivotal balance point. There are about a Trillion in debts every year to cover the current budget. The interest is approaching this borrowing level. Uncle Sham borrows as much as possible. No room to increase is actually there.
Fairly soon, the interest payments will reach parity and equalization to this debt. After that parity equalizes, the next day ALL THE CHECKS WILL START BOUNCING.
When? SOON.
What Drives Long-Term National Debt Growth?
Borrowing to support spending.
Lol. Try bankers greed.
The more fraudulent debt that they can create, the more wealth they can steal. They just use people’s innate desire for “free” shit aka welfare against them.
Banker’s greed empowered by government crony capitalism through the mechanism of the Federal Reserve. Banker’s greed has always existed, but market forces USED to keep it in check in the absence of crony-capitalist central banking.
One does not need to worry about what “drives long-term debt” if one takes away the engine that powers that debt. Abolish the Federal Reserve, ban ALL central banking and fraudulent fractional reserve banking, eliminate all legal tender laws that force the use of any currency, and the future problems vanish. NONE of these promises would have been made or have been possible without the Federal Reserve and a fiat currency.
I always ask people promoting that idea to give a workable plan on how to do it, and the probable results of that plan.
No one ever answers with a real plan.
So I ask you, exactly and specifically how would you do it and what would the results be?
We know what will be the outcome if we don’t abolish the Fed, and repudiate the debt. A global currency will lead to one world government and a totalitarian police state. The only thing preventing the USD from becoming that currency is the lack of global domination. Ending the practice of fiat currency will lead to individual freedom. Understood that those who are vested in the current system, or will be dead within 12 years don’t want change, however, when it collapses, and the sooner the better, there will be change.
I notice you haven’t put forth a competing plan.
I haven’t put forth a competing plan because I don’t see any workable one.
That’s why I always ask those who advocate getting rid of the Fed for one, I can’t see any way to do it and come out ahead afterward.
I like Ron Paul’s plan of starting by eliminating all legal tender laws and allowing the Federal Reserve Notes (aka-dollars) to compete in the open market. Gresham’s law says that good money will drive out bad and so the end of the Federal Reserve Note will eventually come. All taxes on precious metals must first be abolished as gold/silver will no doubt rise up as well-used monetary vehicles and should NEVER be taxed on their gain in value/purchasing power. ALL debt to the Federal Reserve should simply be repudiated. People who hold debt on a country are simply supporting the future enslavement of the population through their demands for interest on borrowing (as the government only has what it STEALS). This one act will end all loans to the worthless government and force them to live within their means as nobody in their right mind would ever lend again. Getting government completely out of the banking market except for prosecution of force and fraud, would leave market forces to bring these criminals into compliance (versus today where the government actively protects the criminals). Will there be PAIN? Absolutely. Will there be pain if the Fed is allowed to continue to their global crime spree (arguably the GREATEST in the history of man)? Yes, and MUCH, MUCH MORE. Who can say for sure what a free market in banking would look like, but Murray Rothbard and Ludwig von Mises have both written extensively about honest banking versus the current crime-ridden system. One thing is for sure. When it all collapses (as it inevitably will), we will be forced to create something new, and returning to this criminal system will only ensure more misery and more power and control in the hands of the same criminals as today.
Am•fed•amine junkie quits the speed. Sobriety is a plan isn’t it?
The elephant in the “planning” notion is that there’s no such thing as a planned economy. Like military intelligence, that’s a self-cancelling oxymoron.
“Planners” are really just schemers. Scammers. Schumers. Plan•tation overseers & slavemasters. Plan•tagenet kings & their pawns.
Plan•tars warts are a virus. Junkies wreck their immune systems, turn themselves into flophouses for viral freeloaders.
But that misleads a bit: turn themselves into what they already are. Evolution is directionless. So’s devolution. Progress: devil in a red regress, Diablo in a black digress, scumbags (elevated by scumbaguettes) in a corrupt congress.
Planning is allowed, even when it’s not insisted (as it usually is), to harden into rigid exoskeleton. Kafkaesque metamorphosis ensues. Atrophy ensues. Death ensues. Learning does not ensue. If anything, learning gets sued…by all the exoskeletonized, cowed & cowboyed, junkies.
Misguided angel hangin’ over me
Heart like a Gabriel, pure and white as ivory
Soul like a Lucifer, black and cold like a piece of lead
Misguided angel, love you ’til I’m dead
Heisenberg uncertainty? No way. Gimme that codependent certainty. Insecurity secured trumps liberty…..
Let me take a stab at a plan;
1- Neuter the Fed. Don’t kill it completely, just simply pare down its charter to a simple “lender of last resort”. But make it hurt. So, for example, Wall Street gets in a pinch, and JP Morgan Chase needs a bailout. OK. Give them a loan on good marketable assets – AT MARK TO MARKET VALUE, not their BS supposed values. Then, loan only 80%. Then, charge a very high interest rate. The banks will learn very quickly that risk does not pay, and they will be begging to pay back that loan to the FED. If they cannot pay it back, the FED “forecloses” basically and then auctions off the assets to pay back the loan. Done. How quickly do you think the TBTF doctrine would be tossed out the windows with that type of regime?
2 – Get rid of fractional reserve banking. Banks would no longer have a leg up on other industries. Basically, they would be forced to a “one dollar of capital” regime. Karl Denninger spelled this out a few years ago. Banks would be like car rental companies essentially; They would rent out money. But, like Hertz, they can no longer rent out money that does not exist. They can make a loan, but if the collateral value recedes too much on a nightly mark to market basis (like your margin account) and they hit negative, game over. Bankruptcy and liquidation. Market discipline.
3 – Force a balanced budget amendment. You can’t spend what you don’t have. Sorry, no deficit spending allowed. If you want to borrow for a war, or borrow for anything else, you must pass a special exemption, AND sell the bonds to a REAL buyer, not just a money printer. This would pare down this unlimited defense and black budget nonsense quickly, as the NSA, CIA, FBI, DEA etc. – AKA the deep state would simply become too expensive. It would wilt and die under its own weight. Think corporate downsizing. Remember, big data centers in Utah, Area 51, etc. are very expensive to operate. Cut the budget, no more BS. Imagine a land auction of a large swath of Area 51, or the NSA leasing out space at their new facility in Utah. That would be a market solution to a largely political problem.
4 – Same with welfare. Sorry, can’t afford it. Healthcare, same deal. Although enforcing anti trust law would go a long way towards removing about 80% of the admin bloat in that industry overnight. This would in turn make medicare somewhat solvent again.
Those are just a few, back of the napkin ways a lot of this debt overhang could be dealt with. Now, will it happen, highly unlikely, cuz well Russia and all. But if this country demanded it, this could be solved pretty quickly…