If you’re looking forward to another great day, you might want to skip Kevin D. Williamson‘s latest column for National Review Online.
The headline numbers from the Congressional Budget Office’s newest debt and deficit estimates: Publicly held debt will be at 100 percent of GDP in 25 years, driven by spending on health care and Social Security that will double over the next quarter century. In spite of the fact that taxes as a share of GDP will be higher than their historical average, the debt will continue to grow — and interest payments on that debt will more than double from their current levels.
That’s the best-case scenario.
The more realistic outcome is that each of those measures of debt and spending as a share of GDP will in fact be considerably worse, because our GDP will grow more slowly. We have entered the realm of the vicious circle: Debt and deficits will slow down economic growth, and slower economic growth will make our debt and deficits worse.
Our growing debt slows down economic growth by sucking up capital that could have been used for productive investments. Today’s investors pay higher taxes to fund yesterday’s spending — at the expense of tomorrow’s workers, taxpayers, and entrepreneurs. …
… The cost of government spending isn’t just the total in the column marked “total disbursements” on the great Washington cash-flow statement. It is that plus the economic growth forgone as a result of that spending.
The CBO, to its credit, has attempted to get a handle on how heavily that growing debt will weigh upon economic activity in the next 25 years, and the answer is worrisome: Taking into account the economic effect of those deficits, instead of our debt hitting 100 percent of GDP in 25 years, CBO estimates that it will hit something closer to 200 percent of GDP — or 250 percent under the least sunny scenario.
Have a nice day! 🙂
