It’s mighty tempting to look at the current shutdown/debt-ceiling fight as some kind of perverse abstraction, and to dismiss all of the hijinks on Capitol Hill and in the White House as exhibitions happening merely for their own political sakes — i.e., to completely divorce it all from the real reason we’re actually here right now. We are a stone’s throw away from $17 trillion in national debt, with absolutely zero plans to even just stop aggressively adding to that number, let alone come anywhere close to simply breaking even. So many liberals are so blithely convinced that ‘we face no impending debt crisis’ and that the simple legislative act of once again raising the debt ceiling has no substantive reason to devolve into such a circus — but here’s a handy little chart to consider, first posted by the Weekly Standard from the Senate Budget Committee:
…When the Treasury department started using so-called extraordinary measures to avoid a breach of the debt ceiling in May, 2011, the debt limit stood at $14,294 billion.
“Today it stands at $16,699 billion, which was reached when Treasury started using extraordinary measures in May of this year. That’s a $2,405 billion increase in 2 years.
“Meanwhile, the economy, as measured by GDP only increased by $1,199 billion between the second quarter of 2011 and the second quarter of this year.
Read: The amount of debt we incurred over the past two years was double the amount of wealth we added to our GDP; or, the rate at which our debt is growing is two times the rate at which our economy is growing — and Democrats’ only proffered solutions to this entirely unsustainable scenario are 1) increasing government spending and 2) raising taxes. Awesome.
Yet, entertaining as all this political drama may seem, the theater itself is indeed burning. For the fiscal position of the federal government is in fact much worse today than is commonly realized. As anyone can see who reads the most recent long-term budget outlook—published last month by the Congressional Budget Office, and almost entirely ignored by the media—the question is not if the United States will default but when and on which of its rapidly spiraling liabilities.
True, the federal deficit has fallen to about 4% of GDP this year from its 10% peak in 2009. The bad news is that, even as discretionary expenditure has been slashed, spending on entitlements has continued to rise—and will rise inexorably in the coming years, driving the deficit back up above 6% by 2038. …
“At some point, investors would begin to doubt the government’s willingness or ability to pay U.S. debt obligations, making it more difficult or more expensive for the government to borrow money. Moreover, even before that point was reached, the high and rising amount of debt that CBO projects under the extended baseline would have significant negative consequences for both the economy and the federal budget.”