(IBD) CBO: Soaring U.S. Debt Will Soon Hurt Economic Growth

The agency’s 2011 long-term budget outlook showed that federal debt would begin to hurt the economy once it reaches about 77% of GDP. CBO’s January budget and economic outlook estimated that it will hit that level in 2013 under its high-debt scenario that is based largely on current policy.

“CBO expects that the large government deficits during the recession and afterward will raise the cost of capital in the future . . . constraining investment,” the nonpartisan scorekeeper wrote in its January budget and economic outlook.

Initially, the impact would be minimal, but it would grow over time as debt levels increase.

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Posted in * Culture-Watch, * Economics, Politics, Budget, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Globalization, History, House of Representatives, Medicare, Office of the President, Politics in General, Senate, Social Security, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The National Deficit, The U.S. Government

4 comments on “(IBD) CBO: Soaring U.S. Debt Will Soon Hurt Economic Growth

  1. Bart Hall (Kansas, USA) says:

    [i]”SOON”[/i] hurt economic growth? — my kiester! The nearly 6 Trillion dollars of [i]new[/i] federal debt incurred since January 2009 have (except for the small portion financed by returning trade-deficit dollars) already sucked the life out of what would have been a normally productive economy.

    Bush’s final deficit levels — described as so horrible in the 2008 election campaign — would have required over a generation to run up the same new debt we have (involuntarily, most of us) taken on in just three years.

    A commercial banker friend (who used to handle $500 Million corporate loans) say that such things rarely happen any more because the banks are under intense government pressure to buy Treasuries. Totally safe, you know. Compared to other “risky” lending, like businesses. Nice bank you have there, kid. Wouldn’t want anything to happen to it, now, would you?

    If anything it has been even worse for small business, which generates nearly all the new jobs in the economy. According to the Bureau of Labor Statistics median family income has already dropped to 1995 levels, and by the end of 2012 should tumble to those prevailing in 1983 or ’84. This has not happened next door in Canada, which has had a conservative government since 2007.

    [b]Four years to wipe out a generation of middle-class progress[/b] … and some idiot in the CBO says it might “soon” cause problems ?? If spending were returned merely to 2005 levels (two wars back then, remember?) the federal budget would be in balance today.

    The problem is almost entirely related to the crony socialism of the current administration, try as they will to shift blame somewhere else. Anywhere else …

  2. AnglicanFirst says:

    A synonym for “crony socialism” is “corporatism.”

  3. Br. Michael says:

    Another is graft and corruption. Making sure the largess goes to your political friends and not your enemies. FDR was a past master.

  4. Mitchell says:

    Another way of looking at it is if we had never had the Bush Tax Cuts or the two wars we would have been paying down debt for the past decade. An alternative, if we had to have the wars was a war tax as opposed to borrowing 2 trillion dollars to pay for the wars.

    I am curious to know, exactly what actions taken solely by Obama are responsible for all of the current debt.