US debt to hit $20 trillion by 2020

[Hannah Bell]

The White House anticipates that cumulative annual deficits will result in $9 trillion in additional debt, an increase of $2 trillion over an estimate it made in February, while the CBO predicts $7.1 trillion in new debt for the same period. The current national debt stands at over $11 trillion...

The differences between the White House and CBO figures are based largely on the question of whether or not the tax cuts for the wealthy enacted under President George W. Bush will be rescinded. The CBO...assumes that the tax cuts will expire in 2011 as currently required by law. The Obama forecast presumes...those tax cuts will remain largely in place...

The Obama administration and congressional leaders of both parties responded to the new data by proclaiming that they demonstrate the unsustainability of Medicare and Medicaid spending...The OMB also noted that Obama “is committed to addressing the shortfall in Social Security system.”

In fact, of the $700 billion increase in spending for the current fiscal year over the previous year, the CBO estimates that about $424 billion was spent on the bailout of Wall Street through the Troubled Asset Relief Program (TARP) and the rescue of the mortgage lending giants Fannie Mae and Freddie Mac, while only $115 billion came through Obama’s stimulus spending.

The total allocation to Wall Street is practically inestimable, but the special inspector general for the Troubled Asset Relief Plan (SIGTARP), Neil Barofsky, has said that among all of its financial stabilization programs, the federal government is on the line for as much as $23.7 trillion — $3.7 trillion more than the total national debt the White House is predicting for 2020.

The US spends far more funding its military, war, and spy operations than it does on Medicare and Medicaid. In 2009, for example, the federal government spent a combined $632 billion on Medicare and Medicaid, while it spent $822 billion on defense spending, “the war on terror,” and the wars in Iraq and Afghanistan...

Another expenditure that will eclipse spending on entitlements in the coming years is the interest the US must pay to service its debt. In 2008, the US paid $451 billion in interest on the national debt. A significant proportion of these interest payments find their way to the major banks that have been bailed out by US taxpayers over the past year...

On Wednesday, French President Nicolas Sarkozy reiterated demands that a new global reserve currency be created. “The political and economic reality of a multi-polar world will eventually have to be transmitted on the monetary level,” Sarkozy said from Elysée Palace. Similar calls have been made by leaders representing China, Russia and Brazil, among other states.

The demands of foreign creditors and mounting pressure on the dollar are further propelling the US ruling class attack on health care, retirement, and other forms of social spending.


http://www.wsws.org/articles/2009/aug2009/debt-a28.shtml

[Hannah Bell]

1. kick

[HamdenRice]

2. WSWS: Economic illiteracy R us!