The U.S. is heading straight for a fiscal calamity in the next decade. Even if you believe the CBO’s Rosy Scenario projections——-which assume that we will go 207 months thru 2026 without a recession or double the longest expansion on record and nearly 4X the normal cycle length—–we will still end up with $28 trillion of national debt and a $1.3 trillion annual deficit (5% of GDP) by 2026.
But that’s the optimistic case! As I demonstrated recently, if you get real about all the enormous headwinds down the road—-including the virtual certainty that the Red Ponzi will have a crashing landing and take the global economy down with it—- you end up with a truly dismal picture.
To wit, just assume economic performance during the next ten years is no better or worse than the average of the last ten years, including the last decade’s 2.5% growth rate of wage and salary income.
The result is that by the out-years CBO has over-estimated taxable income by more than 20% or $2 trillion per year; and that means, in turn, that CBOs current forecast is built on massive phantom revenues, given that under current law the payroll and income tax take from wages and salaries is just under 35%.
Accordingly, with sober economic assumptions and existing policy, the annual deficit is heading for $2-3 trillion per year by the middle of the next decade. This means the nation will accumulate incremental debt of $15 trillion or more in the interim, and that by 2026 the national debt will reach $34 trillion or 140% of GDP.
Those are Greek style fiscal ratios. And they would come at the very time that the 78 million strong baby-boom generation is at peak retirement levels.
Yet, not only does Hillary Clinton insist that social security benefits are sacrosanct and actually need to be increased, along with lowering the Medicare age to 50 years, she also insists that Washington remain the world’s policeman and imperial hegemon.
In a word, a Clinton presidency would mean Big Government on both sides of the Potomac—–a combined Warfare State and Welfare State that would positively bankrupt the nation during the next decade.
The fact is, Washington is still spending upwards of $700 billion per year on defense, international security assistance, foreign aid and the rest of the surveillance state; and the total is more than $850 billion if you count the cost of supporting veterans from all the misbegotten wars and interventions going back to the 1950s.