The National Debt Bubble is About to Inflate

Our politicians are about to put the national debt bubble expansion into overdrive.


Lately we keep hearing about how great the economy is under the Obama Administration because the deficit is smaller. A smaller deficit is still an expanding national debt so the claim is irrelevant. The smaller deficits are still adding to the larger deficits and nothing is being done to pay down the debt. No one in Washington has any desire to pay down the actual debt.

Additionally, these smaller deficits have come about due to record amounts of revenue coming into the federal government. So even with substantial increases in plunder, the government still can’t restrain itself in spending.

Furthermore, the debt has been set up to explode. The Miami Herald reports, “Federal debt will explode over next 10 years, CBO says.”

The federal debt is set to explode over the next decade even as the budget deficit is projected to reach its lowest level of the Obama presidency, the Congressional Budget Office said Monday.

The annual deficit should total $468 billion for the 2015 fiscal year, which will end Sept. 30, the nonpartisan budget office said. That’s a tad better than the $483 billion in fiscal 2014, and it amounts to about 2.6 percent of the overall economy, the smallest percentage since 2007 and just a hair under the 50-year average.

The improving deficit numbers are temporary, however. Budget deficits are projected to begin going up again in 2018, and to nearly double by 2024 as retiring baby boomers strain the health and retirement systems, the economy grows more slowly and interest on the nation’s outstanding debt rises.

By 2025, the annual budget deficit is forecast to hit 4 percent of the overall economy, much higher than the 2.7 percent historical average.

Every year’s deficit adds to the debt, which already stands at $18 trillion by one measure and which would be much higher if not for the historically low costs of borrowing, which have allowed the U.S. government to retire or roll over debt with unusually low costs. Think of it as the government refinancing existing debt.

We are being set up to self-destruct. This is a message the Republicans could use to attack Obama, propose extremely necessary spending cuts (to get Obama to record his veto and thus hurt the Democrats in 2016), and to run in 2016.

But I expect instead they will raise spending according to the plan and raise taxes as well.