U.S. Must Control Debt “Or Face Possible Panic in Financial Markets”

December 15th, 2009

This is a very interesting bit of news to go along with Hyperinflation Special Report by John Williams of Shadow Government Statistics from yesterday. Similar timelines.

Via: Reuters:

The U.S. government must craft a plan next year to get its ballooning debt under control or face possible panic in financial markets, a bipartisan panel of budget experts said in a report on Monday.

Though the government should hold off on immediate tax hikes and spending cuts to avoid harming the fragile economic recovery, it will need to make such painful changes by 2012 in order to keep debt at a manageable 60 percent of GDP by 2018, according to the Peterson-Pew Commission on Budget Reform.

Without action, investors could lose confidence in the United States, driving down the dollar and forcing up interest rates, said the former lawmakers and budget officials who crafted the report. That could cause a sharp decrease in the country’s standard of living.

“We will be less free if we don’t tackle this,” said Jim Nussle, a Republican member of the commission who earlier served as a White House budget director and chairman of the budget committee in the U.S. House of Representatives.

The 34-member commission published its report as Congress was poised to raise the debt limit from its current $12.1 trillion level to allow the government to continue operating.

The national debt has more than doubled since 2001, thanks to the worst recession since the 1930s, several rounds of tax cuts and wars in Iraq and Afghanistan.

A looming wave of retirements over the coming decade is expected to make the situation worse.

The national debt currently accounts for 53 percent of GDP, up from 41 percent a year ago. That’s likely to rise to 85 percent of GDP by 2018 and 200 percent of GDP by 2038 unless dramatic changes are made, the commission said.

The commission did not issue specific prescriptions but said tax increases and spending cuts would probably be needed.

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One Response to “U.S. Must Control Debt “Or Face Possible Panic in Financial Markets””

  1. scarletfire Says:

    So we had the set up…the artificially induced financial crisis…the proposed solution….an undemocratic bailout of the fat cat bankers…and now the final goal…the bankers telling us how to spend what money is left after they looted most of it…so we cut as many social services as possible…of course no mention of stopping these insane wars or cutting the budgets of the military industrial complex..
    I’ll be surprised if the US actually passes a health care bill that expands coverage in any meaningful way..unless the goal is to expand medicare to kill it by revealing well it’s just too expensive now so me must end the whole program (like the goal of privatizing social security to rob it blind)
    the game plan is getting easy to see by the day…and more painful to watch as well

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