It’s worse than you thought:
Despite a modest recovery, the 2010 budget deficit will be higher than the 2009 deficit. Nearly 42 cents of each dollar Washington spends will be borrowed. Even by 2020 – which Obama’s planners assume will be a time of peace and prosperity – annual deficits would still exceed $1 trillion. By that point, nearly a fifth of all taxes would go toward paying the interest on this record debt.
But it gets even worse. I have yet to see anyone take a hard look at where interest rates will go. We’ve been borrowing money on the cheap — short term. Our finances are going to hell and we’ll need to refinance that debt in short order. So we’ll find ourselves paying off the Visa card at 5% by putting it on the MasterCard at 8% and then on the Discover at 11%.
At some point, unless we get a Congress with some fiscal restraint, it all spirals out of control. And we might not even notice when it starts — for the first little while, inflationary spirals feel pretty good.
You know what I enjoy most about it? When you get to watch Congress-folk in front of the camera getting all upset as they rail against the outrageous behavior and acts in congress, as if they were talking about some other congress that’s out there causing all these problems.
I caught the President complaining about recent budgets passed by congress, and then I realized that until recently he was active and voting in the same congress and voting for the very things he was now complaining about coming from congress.
Reminds me of little kis up to what they shouldn’t be. Ask Obama bin Whining if he drinks koolaid and while wiping off his koolaid mustache says, “Nope, not me”.
Hey! there was a ‘d’ in kids when I hit submit. oh well, it coulda been my brain moving faster than my fingers.
Anyway, it makes me glad my mortgage is fixed and the rate on my credit card hasn’t gone up. But I really feel for folks trying to sell. My sister and her hubby want to move back to Colorado but they can’t even get a nibble on their house. When they finally do, will interest rates be so high they won’t be able to afford it?
if i might quote ross perot, “you don’t finance long term debt with short term money”
unless, i guess, you are a politician
At some point, unless we get a Congress with some fiscal restraint, it all spirals out of control.
Unfortunately, for a long time, Congress has shown less fiscal restraint than a spoiled 13 year old girl given free use of her daddy’s platinum card.
The Democrats were bad, then the Republicans proved they could be just as bad. Then the Democrats won again and proved they could be even worse.
First Weimar, then Hitler, then World War, this time nuclear.
4. jw
LOL, yeah, old Big Ears was right about a few things.
1. Frank
It is weird isnt it? He must have short term memory. Or maybe Sentor O was himself and was replaced by a doppleganger when he became prez? Or vice versa. It would explain his memory loss.
LarryJ: Well said, Sir!
The Republicans were chosen in 1994 to clean up the mess, and instead went on to show that they could be just as irresponsible and corrupt as Democrats. Now the Democrats are proving that if they try really hard, they can out perform the Republicans in wasteful spending and corruption.
RE: “At some point, unless we get a Congress with some fiscal restraint, it all spirals out of control.”
And given that we can’t get a Congress with even a modicum of fiscal restraint – either Democrat or Republican, you might as well shorten that to: “At some point it all spirals out of control.”
Soon after that the US economy will start to resemble the economy of Zimbabwe. We probably won’t need term limits after that: large sections of the population will descend on Washington to drag politicians out into the streets and hang them from lampposts.
Your description of Americans descending on Washington strikes a chord. I’ve been wondering about that possibility for a long time myself. By the time we hit Zimbabwe status, those large sections of the population might include all 300 million American people.
All those ‘rosy’ projections are based on people being able to pay the taxes they owe on 15 Apr every year ~ those who receive bonuses, work independently and other wage types that make with-holding difficult to determine. Where you pull April taxes out your butt when you’ve been laid off, say, since the prior October, I have no idea.
I think this is all overly alarmist. What’s the likelihood that an entire market can be destroyed just by undermining massive borrowing by radically changing the interest rate. That reasoning flies in the face of years of successful sub-prime lending. Granted I haven’t looked at a newspaper in the last two years, but unless some cataclysmic financial meltdown happened to change market fundamentals, it seems pretty clear that leveraging wanton near term spending against long-term borrowing is a win-win situation.
It’s kinda fun, watching everyone else “harumph” about Our Obvious Ills, while I groove on Stephen’s multiple Firefly references…