It is official. The CBO in its January 4 press statement (The “Fiscal Cliff” Deal) declared that Congress’s January 1 agreement will “produce (ten year) deficits that are smaller— but only by $0.7 trillion to $0.8 trillion.” Thus we face annual deficits of $920 to $930 billion even, in the unlikely case, that sequestered spending cuts go into effect and Obama Care’s costs come in on target. Continuing as is means trillion dollar deficits as far as the eye can see.
Even five years of trillion dollar deficits are unsustainable: At
normal interest rates of 5 percent, almost all personal income tax
revenues would go to pay interest, which would exceed expenditures on
social security! Only the Fed’s Bernanke’s incessant quantitative easing
conceals the mess we are in.
As we barrel down the road to fiscal ruin, Obama shows no interest in
reforming the entitlements that are driving the crisis. He demagogues
those who propose to control discretionary outlays, and he diverts blame
to others: “Everything would be fine if the rich pay their fair share,”
he repeats, while knowing the U.S. taxes its rich more heavily than any
Obama’s indifference to the looming debt catastrophe could have two
explanations (We rule out that Obama cannot do arithmetic. He claims he
“can do the math.”)
go to forbes.com