{"id":71668,"date":"2018-05-29T15:00:43","date_gmt":"2018-05-29T19:00:43","guid":{"rendered":"http:\/\/kendallharmon.net\/?p=71668"},"modified":"2018-05-29T19:41:44","modified_gmt":"2018-05-29T23:41:44","slug":"ps-martin-feldstein-americas-exploding-budget-deficit","status":"publish","type":"post","link":"https:\/\/kendallharmon.net\/?p=71668","title":{"rendered":"(PS) Martin Feldstein–America\u2019s Exploding Budget Deficit"},"content":{"rendered":"

The\u00a0federal government\u2019s debt<\/a>\u00a0has risen from less than 40% of GDP a decade ago to 78% now, and the Congressional Budget Office (CBO)\u00a0predicts<\/a>\u00a0that the ratio will rise to 96% in 2028. Because foreign investors hold the majority of US government debt, this projection implies that they will absorb more than $6 trillion in US bonds during the next ten years. Long-term interest rates on US debt will have to rise substantially to induce domestic and foreign investors alike to hold this very large increase.<\/p>\n

Why is this happening? Had last year\u2019s tax legislation not been enacted, the 2028 debt ratio would still reach 93% of GDP, according to the CBO. So the cause of the exploding debt lies elsewhere.<\/p>\n

The primary drivers of the deficit increase over the next decade are the higher cost of benefits for middle-class older individuals. More specifically, spending on Social Security retirement benefits is predicted to rise from 4.9% of GDP to 6%. Government spending on health care for the aged in the Medicare program \u2013 which, like Social Security, is not means tested \u2013 will rise from 3.5% of GDP to 5.1%. So these two programs will raise the annual deficit by 2.7% of GDP.<\/p>\n

Read it all<\/a>.<\/p>\n

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The U.S. debt burden may soon be in the same league as that of Italy, Greece, & Portugal, with or without the recently-passed tax cuts. https:\/\/t.co\/CpwIFWux94<\/a><\/p>\n

\u2014 Paul Banura (@pbanura) May 29, 2018<\/a><\/p><\/blockquote>\n