Politicians destroying our economy
Published: Wednesday, June 29, 2011
Updated: Wednesday, June 29, 2011 20:06
Last week, the Congressional Budget Office (CBO) released its 2011 Long-Term Budget Outlook. The CBO's forecast of America's economic future ranges from bleak to nightmarish, depending on your level of optimism; the CBO's word is "daunting."
According to the CBO, the primary culprits are a perfect storm: anemic economic growth forecast, record budget deficits under President Obama and future spending obligations that will consume a substantial portion of our gross domestic product. Our politicians, through their addiction to spending taxpayer dollars at a rate far greater than our economy can sustain, have set us on the path to economic destruction.
The true blame, however, rests on the American people who voted such grossly irresponsible stewards of our nation's finances into office. Just last week, congressional Democrats, led by Sen. Dick Durbin (D-Ill), called for new government "stimulus" spending. In light of the CBO report, the Democrats' proposal is akin to self-immolation, except many of them will likely be re-elected, while the American people are left to burn.
The CBO report focuses on federal policy and broad economic trends, but the underlying data gives us the opportunity to forecast something much more personal - how much our skyrocketing national debt will cost each of us as individuals.
The national debt is a difficult phenomenon to comprehend. It is upwards of $14 trillion, a number wholly inconceivable to the human mind. Various analogies have been devised to try to give this extraordinarily large number a tangible meaning. For example, $14 trillion in $1,000 bills would stack 900 miles high. To bring the concept down to earth, the national debt is often divided by the United States population, which is at roughly 300 million, in which case it amounts to over $46,000 for every man, woman and child in the country. However, the CBO predicts that we won't pay any of that money back until long after we're all dead and gone. Despite that fact, we are far from off the hook. As anyone with a credit card knows, the cost of a loan is far greater when you're not paying it off.
The true cost of the national debt – the cost that each of us, as taxpayers, is forced to pay every year of our lives – is not the principal amount, i.e. the $14 trillion, but the interest. The interest on the national debt already accounts for a sizable portion of total federal spending, around 10 percent, according to the CBO, and this will grow substantially in the future. Using the CBO's underlying data makes estimating how much each of us will pay throughout our working careers to cover the interest on the national debt pretty straight forward.
Readers are encouraged to repeat my calculations. All you'll need is the CBO's Supplemental Data spreadsheet and an IRS tax table; I used the 2006 "Schedule Z." Pick your desired annual income, and use the CBO spreadsheet's "Wage Growth" column to calculate your inflation-adjusted income each year for the next 45 years. Use the corresponding IRS tax bracket and include the 7.65 percent FICA tax and a standard deduction to determine how much you'll pay in federal taxes each year. Next, calculate how much of that money will be spent on the national debt interest by dividing the CBO's "Net Interest" column by the "Total Spending" column, multiply this by your annual taxes and add it up.
The CBO provides two budget outlook scenarios: the "Extended Baseline" or best-case scenario, and the "Alternative Fiscal Scenario," which the CBO argues is more realistic and far worse.
First, let's use the best-case scenario. If you're graduating from college this year and earn a career average annual income of $50,000 in 2011 dollars, the interest on the national debt is going to cost you $88,000, which is every penny you'll earn for 15 months of your life. Under the "Alternative Fiscal Scenario," you will pay $165,000, or your entire income for two years and four months of your working life.
Obama's massive deficit spending has increased our national debt by 40 percent in just four years. This spending is beyond reckless; it is generational theft. The CBO report shows that America's younger generation, UCF students included, are the victims of this should-be crime and will pay a price that is unprecedented in American history. This horrible burden – two years of lost income – has been forced upon us by politicians claiming to work in our best interest. The true cost of deficit spending should be foremost in the mind of every UCF student when we go to vote in 2012.