US Drowning in a Sea of Debt and There's No Bailout this Time
by Dan Ehrlich

Guess Who Will Eventually Pay for the Bush-Obama Spending Spree?
The US gross national debt is predicted to equal our gross domestic product by next year. As of November 7, the "Total Public Debt Outstanding" was $13.7 trillion, approximately 95 percent of annual GDP.

What all this adds up to for John Q. Public is the eventual certainty of higher taxes for fewer public services and facilities.

But President Obama lowered taxes, right? Yes, and a big question will be when will he or his White House successor raise them? That's partly what has some Tea Party supporters up in arms.

The Tea Party is viewed by much of the media and political left as the populist conservative fringe of malcontents and eccentrics. To the Right, they're a bit off the page. But they may have a good point, one they themselves may not fully understand and something that's being overlooked by design or ignorance of the media.

Obama seems almost a mirror image of the credit card debt ridden middle class. Instead of paying things off, which he can't or won't do, he simply uses our national gold card to charge more. He may keep charging and charging until eventually our credit limit will be reached. And then he will have to give us the bad news.

The President campaigned on the promise of massive public works projects to create jobs and wealth. A reason these have yet to happen is the fact he can't afford them on his nearly maxed out gold card.

To make matters a lot worse, our debt is annually serviced by interest, $454 billion in 2008, half of which went to foreign countries, which loaned us the money.

Public debt owed to foreign countries has increased to approximately 50 percent of the total or about $3.4 trillion. As a result, nearly 50 percent of the interest payments are now leaving the country. This is at odds with past years when interest was paid to U.S. citizens holding the public debt.

During the GW years America went from being the biggest creditor nation to the biggest debtor nation. And Obama has been forced to keep that ball rolling.

On a more practical level, money that could be used for Obama's public works projects or refurbishing inner city areas will be going to China and Japan, our two largest creditors. And, it will be the taxpayer who eventually picks up the tab.

These interest expenses are projected to grow as the U.S. debt increases to a point where by 2019, half the national debt increases will be from interest that may not have been paid back to the lenders.

The 2010 U.S. budget indicates annual debt increases of nearly $1 trillion through 2019. By then the total U.S. national debt is projected to be $18.4 trillion. The Government Accountability Office (GAO) says the Administration. is on a fiscally "unsustainable" path and that politicians and the electorate have been unwilling to change this path.

In May of last year Britain’s highly respected Economist Magazine stated: "Having spent a fortune bailing out their banks, Western governments will have to pay a price in terms of higher taxes to meet the interest on that debt. In the case of countries (like Britain and America) that have trade as well as budget deficits, those higher taxes will be needed to meet the claims of foreign creditors.”

But, we’re not alone in the world of overspend. Here is chart of world debtor nations. Look at Japan, to whom we owe a mint.

Gross debt as percentage of GDP
..............................2007 2011 Forecast
Austria .................62% ...82%
France ..................70% ...99%
Germany .............65% ...85%
Greece .................104% 130%
Ireland .................28% 93%
Italy...................... 112% 130%
Japan.................... 167% 204%
Holland................. 52% 82%
Portugal................ 71% 97%
Spain .....................42 74%
UK .........................47% 79%
USA .......................62% 100%
Asia.........................37% 41%
Cen. Europe............23% 29%
Latin Amer............41% 35%

There’s not going to be a quick fix to our problem for its wrapped up in our overall decline as an economic power. And as the GAO says, our politicians lack the will to take corrective action…such as putting more pressure on China to allow its currency to float on the open market.

But even that won’t be a cure for the USA, spending trillions it doesn’t have on two wars it may not win. It’s now estimated, when all is said and done, the Iraq and Afghanistan wars will wind up costing America up to $6 trillion. It was reported the other day we’re going to spend around $500 million for a larger embassy in Kabul.

Yet our own people still won’t have proper health care, Medicare and Social Security may have to be rationalized, our cities will be in disrepair, our roads crumbling and entire regions locked in preventable water shortages.

On the other hand, all the President has to do is pull out our Gold Card, hope the limit hasn’t been reached and let the next guy in the White House worry about the debt burden and how much he will have to raise taxes. Passing the Buck is something even the Chinese haven’t mastered the way we have.