The Committee for a Responsible Federal Budget conducts research and provides information to the public on major fiscal issues facing the United States. These include the rising national debt, the budget reconciliation process, health care policy, and the future of trust funds like Social Security, Medicare, Federal Highway, and others.
Its latest missive entitled “Deficit Reduction Is Key to Improving Affordability” lists a number of interesting tidbits.
With long-term interest rates now exceeding projected nomination economic growth, “the U.S. is entering a debt spiral.” The Committee suggests this could cause a fiscal crisis with “exploding unemployment rates, crashing asset values, surging inflation, falling incomes, sharp and unexpected increases in taxes and cuts in government support, or some combination.”
The Committee also contends that many of the efforts seeking to improve affordability are “likely to worsen affordability challenges over time by boosting inflation, interest rates, and the cost of what is being subsidized.”
Other points in the latest missives include:
- Inflation has been above the 2% target for five-and-a-half years and is projected to total about 3.5% in 2026 alone.
- Prices have risen by 24% since March 2021, compared to 11% had inflation remained at its 2% annual target. That’s an extra $7,000 in per capita costs in 2026 alone, although higher inflation has also pushed up nominal wages.
- The growth in the debt-to-GDP ratio over the last quarter century is responsible for an estimated 1.5% of interest rates.
- Mortgage interest rates have risen to about 7%, up from less than 3% in early 2021 and an average of 5% over the prior two decades.
- Health care spending consumes 18% of GDP – over $17,000 per person – with over one-third of the costs paid for directly by the federal government and nearly all costs subsidized by the federal government in some way.
- Failing to save Social Security will lead to a 22% abrupt benefit cut in 2032.
- Under current law, we project debt will rise from 100% of GDP today to 122% by 2036, while budget deficits will grow to 6.9% of GDP.
- The U.S. would need sustained, broad-based growth of 3.3% per year – 83% higher than CBO’s projected growth rate of 1.8% – to hold debt to 100% of GDP.
The paper includes specific recommendations to reduce the deficit (around $2 trillion this year) in the areas of healthcare, Social Security, education, the tax code, and more.
The board and staff at the Committee are impressive, including names like Mitch Daniels, Leon Panetta. John Kasich, Erskine Bowles, Brian Bernasek, Saxby Chambliss, and Joe Manchin.
Too bad their insights will fall on deaf ears in Washington.
“Incline your ear, and hear the words of the wise” – Proverbs 22:17.
Crawford is an author and syndicated columnist from Jackson.
7 comments:
We have a debt based economy and a debt based currency. What the literal heck does anyone expect to happen?
This organization has a website where users can see how they would address the debt and deficit issue - https://www.crfb.org/debtfixer - it's not an unsolvable problem.
Rest easy…President Trump said we’re taking in so much money the national debt will be paid off in short order…
Debt needs to be cut 50%. To do that all areas of the government need to start cutting. First is Medicare. Huge abuse and waste. Raise it to 75 effective for 55 year olds or younger. Cut social security to 70 or younger effective at 60. Re-evaluate the Welfare system.
Defense needs total revamping. Technology used correctly would eliminate all the big fat aircraft carriers that are impossible to man correctly, sitting ducks in the water and now nothing more than an ego trip. Huge waste of money. Think war in Ukraine proved all this. I would hate to go to war with Ukraine. We helped them develop the technology to send the Russians scratching their heads. The Military Industrial Complex is needed but they do not work in the best interest of the country all the time.
Agriculture system needs real help but not subsidies. They need more technology and better use of water. Agricultural schools need to work on this.
Senators need two term limits. Reps need 3 terms. Nobody should be allowed insider trading on anything from President, Senate, House and Supreme Court. Age limit on everybody should be 75.
Government is way too big and wasteful. Everybody knows it…
Not many people have will power to do anything about it.
There is a simple fool proof way to stop this. Quit electing thieves. Make all department explain every dollar they spend, Stop the gravey train for politicians. If something is good enough for the voters it should be good enough for politicians
See how simple it is. Just make the politicians live equal to the voters.
But we have to keep funding to infinitum our greatest ally through the Federal Reserve which is the no-limit credit card they own to loan us our own money with interest, that is then given to them. Make it make sense. I'll wait.
When aren’t they fear mongering? Haven’t we been in a debt spiral for over half a century? Boring!
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