The National Debt Is ‘Unsustainable’ and the Pentagon’s Finances Are a Total Mess, Federal Audit Says

“Measured as a share of the entire U.S. economy, the national debt has doubled in just 12 years and is on pace to grow to historical highs within the next decade. The federal government’s budget deficit—the gap between how much revenue it raises and how much money it spends—is expected to exceed $1 trillion this year.”

“Lawmakers from both major parties have worked together in recent years to pass budgets that exploded annual deficits and added to the debt. Democrats running for president are promising to hike federal spending by trillions of dollars to pay for free college, government-run health care, and the fight against climate change—and even though they are also promising to raise taxes, the math doesn’t add up. That means deficits will continue to grow. Meanwhile, President Donald Trump has abandoned any pretense of fiscal conservatism, and most of his party has followed suit.”

Uncle Sam Doubles Down on His Spending Addiction

“This fiscal year, 2020, the federal government will collect $3.6 trillion in tax revenues. But due to its spending addiction, the government will expend $4.6 trillion. This means that the government will have to borrow $1 trillion this year alone, in order to cover a deficit of 4.6 percent of GDP. This is the first trillion-dollar deficit not due to a global recession.”

“Thankfully, the economy is doing well for now. This good performance is masking many of the ill effects, not just of the trade war but also of our overall fiscal situation. The reality, however, is that a growing economy during a time of peace should not be accompanied by growing deficits.”

Even in Impeachment-Crazed D.C., It’s Always a Good Time To Borrow and Spend!

“”In a 2012 paper, economists Carmen Reinhart and Kenneth Rogoff define a “debt overhang” as a situation in which the debt-to-GDP ratio exceeds 90 percent for five or more consecutive years. After looking at 26 debt overhangs in 22 advanced economies since 1800, they conclude that “on average, debt levels above 90 percent are associated with growth that is 1.2 percent lower than in other periods (2.3 percent versus 3.5 percent).” These overhangs last a long time—in their sample, the average lasted 23 years—creating a cumulative loss in economic growth that’s “nearly a quarter below that predicted by the trend in lower-debt periods.”

That work has been validated by left-wing economists associated with the University of Massachusetts, who were critiquing an earlier version of Rinehart and Rogoff’s work that had mistakenly found that debt overhangs reduced growth below zero. The critics conclude that “the average real GDP growth rate for countries carrying a public-debt-to-GDP ratio of over 90 percent is actually 2.2 percent.””

We crossed that Rubicon back in 2010″

“You don’t have to believe there’s something magical about a 90 percent threshold to grok the idea that unpayable government debt has a negative effect on growth. The people who comprise markets recognize that a day of reckoning will eventually come and government will do some combination of raising taxes, reducing services, or inflating currency. None of those outcomes, and especially the unpredictability they promise, is good for economic growth. Which helps explain why the CBO predicts that average annual growth between 2019 and 2029 will be 1.9 percent. That figure compares to 3.2 percent average annual growth between 1950 and 2018.”