To the Valley News:
We are hearing and reading more each day about how America is rapidly approaching the fiscal cliff. It’s true, of course, and people really need to believe it and prepare for it. Our government is running us into such massive debt that recovery from such debt is impossible. Stemming the flow of government spending and trying to stabilize the debt is our only real option.
Recently many of you read about Spain’s economic problems and the difficulty they are having trying to fund their debt, but the reality is, as a percentage of debt to GDP, America is worse off then Spain and only marginally better off than the other countries you read about; Portugal, Italy, and Ireland. Greece is in a class of it’s own. GDP, or Gross Domestic Product, is the value of everything a country produces.
Currently total government spending represents 35-percent of our GDP. 38 years from now, by 2050, our Congressional Budget Office and GAO projects that percentage to grow to 57-percent. So pretty soon government spending will represent well over half of what this country produces. The difficulty being that government spending is funded by taxes and borrowing.
Taxing the rich doesn’t come close to raising enough, since it would only cover 15-percent of our annual deficits. Rising interest rates will increase our cost of borrowing dramatically. Social Security and Medicare will soon be out of money. So we’ll be at the cliff well before 38 years from now.
So, where will the money come from? Therein lies the rub; there’s nowhere for it to come from, therefore the cliff. Few Americans will enjoy that experience.
Nobody wants to give up any benefits, but it’s unavoidable, the government spending has to slow down. People must recognize this, starting with our politicians.