Congressional Budget Office Draws Blistering Attention to Runway Debt Crisis in America
McKeon: This is another red flag to the spending problem in Washington
WASHINGTON, D.C. — Rep. Howard P. “Buck” McKeon (R-Santa Clarita) today released the following statement after the Congressional Budget Office (CBO) released a report on the looming debt crisis facing America:
“The CBO, a nonpartisan oversight agency charged with reviewing congressional budgets, has released a daunting report detailing the alarming budget outlook facing our nation today and in the future. This report should serve as a red flag to the Administration and Senate Democrats that we must address the debt issue and implement fiscally conservative, concrete budget plans to gain control of the nation’s debt disaster.
“We don’t have a revenue problem; we have a spending problem. As the CBO highlights, the constant increase in taxes, healthcare costs, compounding interest rates will only damage the economy further unless Congress can be quick to impose a new strategy. Congress must aim for a spike in new job creation and reassure business owners that new hiring plans will only contribute to the growth – not failure- of their companies. Investors need to have a sense of confidence when financing the American marketplace and not see their money wasted on enormous government bailouts. ‘A Sustainable Financial Future’ should be the new motto for America to keep us focused and on track to pass down to our children a country with a strong financial foundation. As long as we continue to grapple with debt and deficit woes, we will not be able to focus on innovation and competitiveness.
We can’t continue on the same path we are on, and this report is a factual reference to what isn’t working; we need a new direction to improve the economic health of the nation for future generations.”
June 22, 2011
(COMPLEMENTS OF THE HOUSE REPUBLICAN CONFERENCE)
Our Job-Killing Debt Will Eclipse the Economy This Year: According to CBO, total debt will overtake the size of the entire US economy this year, and debt held by the public (as opposed to the overall national debt which includes inter-governmental holdings) will eclipse the economy in ten years.
Job-Destroying Public Debt Will Grow 83 Percent Under President Obama: According to CBO, the debt held by public was 40.3 percent of GDP in 2008, the year before President Obama took office. According to CBO, public debt will reach 74 percent of GDP in 2012—a real debt increase of 83.6 percent in four years under President Obama.
Our Debt Will Destroy More Jobs With Higher Interest Rates and Higher Taxes: According to CBO, “Higher levels of debt imply higher interest payments on that debt, which would eventually require either higher taxes or a reduction in government benefits and services.”
Our Debt Keeps Us From Creating Jobs and Makes the Jobs Crisis Worse: According to CBO, “Growing debt also would increase the probability of a sudden fiscal crisis, during which investors would lose confidence in the government’s ability to manage its budget and the government would thereby lose its ability to borrow at affordable rates. Such a crisis would confront policymakers with extremely difficult choices.”
Unemployment Projected to Remain High: According to CBO, the unemployment rate is expected to remain high for the immediate future, averaging 9.4 percent in 2011, 8.4 percent in 2012 and 7.6 percent in 2013.
Washington Must Not Wait to Cut Spending and Lower Deficits. According to CBO, “the sooner that long term changes to spending and revenues are agreed on, and the sooner they are carried out once the economic weakness ends, the smaller will be the damage to the economy from growing federal debt.”
Government Health Care Spending Will Double Over the Next 24 Years: According to CBO, real government spending on mandatory health care as a percentage of GDP will nearly double, from 5.6 percent in 2011 to 10.4 percent of GDP by 2035. Because health care cost increases cannot be contained, health care spending will help drive our job-crushing debt from 70 percent of GDP today to 187 percent of GDP in 2035.
Interest Payments on Borrowed Money Will Increase Exponentially: According to CBO, interest payments on the debt will increase from 1.4 percent of GDP in 2011 to 8.9 percent of GDP by 2035—an increase of 536 percent.
Our Debt Has Put Us on the Same Path As Greece: CBO says our uncontrolled debt has increased the chances of a fiscal crisis in which investors would be unwilling to loan more money to the government. According to CBO, in the face of such a crisis, “the government would need to undertake some combination of three actions: restructuring its debt (that is, seeking to modify the contractual terms of its existing obligations); pursuing inflationary monetary policy (that is, increasing the supply of money); and adopting an austerity program of spending cuts and tax increases.”