The View From 1776

Inflation Or European-Style High-Tax Stagnation?

Mountainous Federal debt blocks the path to economic growth.

Posted by .(JavaScript must be enabled to view this email address) on 04/25 at 11:35 PM
  1. In the President's 2011 budget, he has interest on debt at $188 billion this fiscal year (2010), $250 billion in his budget and these projections out to 2020

    quote
    Pg 153 of budget (net interest)

    2010... $188b
    2011... $251b
    2012... $340b
    2013... $434b
    2014... $516b
    2015... $586b
    2016... $652b
    2017... $716b
    2018... $779b
    2019... $844b
    2020... $912b

    http://www.whitehouse.gov/omb/budget/fy2011/assets/budget.pdf

    What this means is that according to his projections on tax revenues, we go from just over 8% of tax revenues going for interest now, to almost 20% in what the CBO warns are overoptimistic projections.

    He also project GDP only rising during the stimulus period, out to mid decade and then falling and deficits going up to over a trillion again after dropping to about $700 billion mid decade.

    Interest on debt eats up more and more tax revenues not only at the Federal level but in cities and states. This will also impact home buying and corporate debt for expansion and hiring.

    However, to be fair, this is not this administrations fault or the previous or the one before it. This goes back to 1968 when we first started borrowing $1 for $1 of GDP growth.

    The President's 2011 budget projections read like a horror show with under the most optimistic scenarios, we peak mid decade in this illusion of a recovery where growth in debt exceeds growth in GDP, and then he projects we head down again with deficits rising from the $700 billion, mid decade level to back over a trillion.

    This report sums up the international concern. It is from a large think tank the international financial community uses for projections on various nations and global trends.

    quote

    . as regards the United States, no one; because the size of its financing requirements exceeds the capacity of other players (including the IMF (15)) and, in winter 2010/2011, this event will lead to the explosion in the US Treasury Bond bubble founded on a huge increase in interest rates to finance sovereign debt and private debt refinancing needs, causing a new wave of financial institution bankruptcies. But it isn
    Posted by JanPBurr  on  04/26  at  03:04 PM
  2. We need a modern Jubilee Year, the cancelation of all debt, to remove from our necks this odious debt yoke. I have all the details on my blog if you would like to check it out, and perhaps, help spread the word.
    Posted by Justin  on  05/04  at  02:18 PM
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