The current CBO report now indicates that our debt will stabilize around 77% of current economy for the next few years and then climb as a percentage of the economy by 2019 as our aging population drives up additional spending for Social Security and Medicare. While this may sound as good news, it really represents a gathering of storm clouds which will have a significant impact on our ability to handle our rising national debt in future years. To begin with, the current 77% ratio of debt to our economy is very high by historical standards and is slowly becoming unsubstantial. The last time this ratio was this high was during World War II.
No matter which political party you are affiliated with, the national debt cannot be stabilized by just increasing tax revenues without a corresponding deduction in the debt that is contained by a realistic budget. A reduction of the debt means cuts across the board in government spending and there lies the problem. Reducing any entitled programs can be a difficult task, because once you begin any program of this type, participants become comfortable with receiving the additional funds and it becomes next to impossible to restrict the program or make necessary changes needed to meet fiscal changes within the economy. Take the case of Social Security and Medicare where the program is expected to become insolvent in the next few years. Proposed changes are currently stalled in legislation between two parties who find it increasingly more difficult since the election to agree on anything. For those who believe that these problems can be handled at some future day when the situation really becomes serious fail to realize that the answers to most government programs require time to correct, hopefully, before we all become victims of the unresolved problem.
When John Kennedy became president in 1961 he made famous the following statement “ask not what your country can do for you, but what can you do for your country”. In the early sixties, this challenging statement which was part of his inaugural address at the time set a new tone for major achievements and goals for a country on the move. With our continual growth in government programs and unbridled spending, most citizens would probably consider these words by President Kennedy as appropriate for the early sixties, but totally unrealistic in resolving the problems we face today. Maybe so, but history has shown that big government with its bloated bureaucracy and red tape attempting to resolve given situations often become the problem its self. Finally, remember that every year we choose to have our government handle our problems is another year we give up just a little more of our precious individual freedom. And that maybe the biggest problem of all!
The comments in this blog are those of the writer and are to be considered answers to any given situation. (Please visit our web-site at Compass Strategies Group. com)
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