This blog deals primarily with fiscal and economic issues. Overall I am a political moderate but I am a hardcore conservative on our national debt. It is in very bad shape as I have said over and over again:
- First of all, our debt is now at 78% of GDP (for the public part on which we pay interest), the highest it has been since right after WWII and is predicted by the Congressional Budget Office to keep getting worse. Right now interest rates are so low that it is almost free money. But when interest rates go up, as they will eventually, interest payments on the debt will skyrocket and create a huge fiscal burden for the United States. The longer this takes to happen, the greater our debt will likely become, and so the eventual interest payment problem will have gotten that much worse in the meantime.
- The only way to fix the debt is to either raise taxes and/or curtail spending on entitlements, by far the biggest and fastest growing budget item. Either of these approaches requires sacrifice by large numbers of people and therefore is difficult to achieve politically in the best of circumstances.
- And now we have the worst of circumstances! Our political system is deadlocked with both sides trying to destroy the other side. Any move by either party to either raise taxes and/or curtail entitlement spending will be strongly attacked by the other side. The attached graph shows that polarization and debt level go hand in hand. In other words, our rapidly worsening debt level is a symptom of our ever increasing political polarization.
Summary. Our large and rapidly growing national debt is a very serious and urgent problem. It requires a bipartisan solution which will be very hard to achieve in our current deadlocked political system. It is difficult to be optimistic about addressing this problem effectively in the current environment.