The problem of US deficits is so deeply "structural" at so many levels, it is not even funny.
Our deficit is currently 41.4 trillion, our debt approximately 410 trillion (40 percent of GDP). These figures don't include the country's social responsibility (read further liabilities) to people with no health insurance, nor do they include contractually foreseeable liabilities to Medicare and Social Security! Also, we are "waking up" (from a coma) regarding our finances only in the midst of a near recession due to over-leverage. All this is well repeated even in mainstream media (though sadly still not yet comprehended/absorbed by even a simple majority of the population)!
The following is an additional piece of information that should strike fear into the Obama administration, as well as analysts and concerned citizens: the "rest of the world" is getting along just fine despite the US. Brazil, China, India are thriving. Even Russia, Latvia, etc. are coping rather well. This implies that whatever figures Beltway analysts in the Congressional Budget Office are projecting in their omniscient spreadsheets, in terms of trends in future US GDP growth versus trends in the cancerous growth of deficits, are all irrelevant, because the entire US economy has become globally irrelevant!
Finance and brokering is what has become a large part of our economy; military spending is the other significant part. It was credit that enabled GM's customers to buy their cars. It was "ninja" loans that filled Home Depot, and fuelled housing starts. Our current GDP is being bloated by war spending... which wars appear to be ending soon, with no geopolitical gains for all that effort.
Now power is shifting out eastward, to Asia. When it rains it pours. How will the US even look to compete? We will not be selling DRAM chips to the Koreans or Japanese. We will not be selling Chryslers to the Chinese or Germans. We will not be providing software services or healthcare to India. On what, exactly, is the CBO office basing its cliched forecasts of GDP growth?
Meanwhile the political dialogue between the two major parties remains asinine, and the prevailing global world view of most of our citizens remains out of touch.
New York, NY
Nov 4 2009 - 8:37pm