The Reality of Our Debt Crisis: By the Numbers | Capital Commentary

The Reality of Our Debt Crisis: By the Numbers | Capital Commentary by Michael Gerson.  MGB: The reality is that the CBO report shows that the major driver in debt accumulation is letting net interest ride to meet the needs of the world's currencies and speculators.  Medicare and Medicaid as a percentage of the economy don't grow that much.  Indeed, as health care reform is implemented, it will require fixes that will also fix Medicare and Medicaid.  Getting Pentagon spending under control is vital, if only to remove all those obstacles to quick decisions on weapons that will help soldiers in the battlefield.  Sending the service department civilians to the Office of the Secretary of Defense while sending everyone in uniform back to the product commands, or better yet into active deployment or training will save money and end the war more quickly.

An important fact to note is that if net interest is not rolled over into borrowing, but instead paid down (especially the Social Security Trust Fund - which cannot be redeemed by cutting benefits already earned by those of my age), those doing the paying won't be the children and grandchildren of most citizens.  Truly, it is only the wealthier families who could be taxed enough to pay back debt without slowing the economy.  Indeed, removing these people from their money may actually result in growth for the economy, since the government will spend it or pay promised benefits.  If we ignore the problem, however, the people who are holding our debt and benefiting from our Pax Americana will start wanting a piece of the action in decision making.  The real argument, then, is not economic collapse but eventual political absorption.