Treasury releases financial report for government
The Treasury has released the 2009 Financial Report Of The U.S. Government, which is full of facts, charts and figures on the fiscal health of the country. Let me tell you, if you even have the slightest understand of basic economics, this report should trouble you.
I’ve pulled a couple of the charts to give you an idea of how screwed we really are. Let me be clear in saying that I am not blaming this on the current administration. They are, however, doing nothing to deal with the problem. In fact, they are doing what previous administrations have done…building on past fiscal irresponsibility with more fiscal irresponsibility.
This first graph shows that without major policy changes, debt as a percentage of gross domestic product (GDP) will exceed 200% in the next 35 years. It gets even worse as you can see below. Part of the reason is demonstrated in the next chart.
As you can see here (click to enlarge for better detail), interest on the national debt becomes more of a problem than entitlements, which is what many fiscal conservatives often talk about. This is a financial burden that cannot be solved by simply raising taxes, because with that economic growth is put at risk.
Over the last few decades, annual government spending as a percentage of GDP has been around 20%. However, In the next 20 years, spending as a percentage of GDP will hit 30% and it will just continue to grow.
Pay particular attention to “Social Insurance” a little further down on this image. The unfunded liabilities of the entitlements created by Congress, that is Social Security and Medicare, stands at $45.878 trillion. Unfortunately, reform is not on the table for either party. Democrats want to expand these entitlements, while Republicans are demagoguing cuts to Medicare.