For most of the past decade, the United States has been living beyond its means, borrowing money frantically to compensate for tax cuts and pay for unfunded wars, new entitlements, bank bailouts, you name it. The breakdown in fiscal discipline is evident in the numbers.
In its last act of 2009, Congress voted to raise the federal debt ceiling to a once unimaginable level of $12.4 trillion to avoid a government default. But since lawmakers increased the maximum amount of borrowing by "only" $290 billion, the system will soon need another fix to feed a voracious borrowing habit.
In financial terms, fiscal year 2009 was a horror. The $1.4 trillion budget shortfall was equal to 10 percent of the economy, the worst showing since World War II. Much of it was due to the bailouts under former President Bush and President Obama and the $787 billion stimulus package, which kept the economy from sliding into another Great Depression.
This budget gap capped a near-decade of runaway deficits. Today, the country is shoulder-deep in red ink, with a tidal wave approaching. Federal debt equals 53 percent of the Gross Domestic Product, way above the 37 percent average of the past half-century. The government pays $200 billion in interest each year.
And the increase in debt is accelerating. The deficit roughly doubled from about $6 trillion in 2002 to $12 trillion. At this rate, the national debt is on track to hit 85 percent of GDP by 2018.
As a result, barring strong action by Congress and President Obama to restore fiscal sanity, profound and harmful long-term consequences are inevitable.
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