The Government Accountability Office estimates that by 2040, interest payments will absorb 30% of all revenues and entitlements will consume the rest, leaving nothing for defense, education or veterans' pensions.
I know that many economic folks are predicting that we'll recover from this recession on X date or Y quarter, but I think they're wrong.
There is no recovery from this amount of debt. The only recovery is to stop spending and no special interest group is going to give up their entitlements. More from Mr. Zuckerman:
Everybody is dazed and confused by all this talk of additional indebtedness in the trillions of dollars. Our soaring national debt will require cataclysmic adjustments to accomplish the restoration of a balance in our fiscal position.
Otherwise, we face a dramatic erosion of U.S. economic and financial standing, raising the risk of skyrocketing interest rates and a crash in the value of the dollar. Americans can no longer rely on their stocks and the soaring value of their homes to put their kids through college and support early retirement. For the first time since the Depression, U.S. companies are not only cutting jobs; they are cutting wages. We are undersaved and underpensioned, and we will have to adjust to a more frugal life.
The Social Security nightmare has hit home and until we address that issue, the recession will remain.
From Shannon Love (Chicago Boy, The Dangers of Decompartmentalized Health Care Spending, August 12, 2009):
The elderly consume 70% of all health-care spending.[updated here and here] That means that when it comes to cost control they will bear the brunt of the burden. If we don’t cut spending on the elderly we can’t reduce costs without simply denying care for everyone else. When it comes down to a choice between spending on old people and children, the elderly know full well who we are going to pick. The elderly themselves will choose to spend money on their grandchildren rather than themselves.
It doesn't appear that this Congress or this Administration is serious. Sane people knew that giving the debt keys to a Democratic Congress was a stupid mistake, but this isn't a mistake that can be solved simply by voting in Republicans next term. The money will be spent and the debt will be there to be paid off. The debt remains, even if the legislators are no longer home.
And speaking of no longer home (Alan Zibel, AP/Yahoo News, Foreclosures rise 7 percent in July from June, August 13, 2009):
WASHINGTON – The number of U.S. households on the verge of losing their homes rose 7 percent from June to July, as the escalating foreclosure crisis continued to outpace government efforts to limit the damage.
Foreclosure filings were up 32 percent from the same month last year, RealtyTrac Inc. said Thursday. More than 360,000 households, or one in every 355 homes, received a foreclosure-related notice, such as a notice of default or trustee's sale. That's the highest monthly level since the foreclosure-listing firm began publishing the data more than four years ago.
Ugly things are likely to happen before this is truly solved. I'm not advocating it, only forecasting the truth.
H/t Instapundit (here, here, and here.)
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