U.S. Budget Deficit & Federal Debt

The issues and news surrounding the U.S. Deficit has been sort of like low-level background noise as ever since I was a child.  However its size as a percentage of the Gross Domestic Product and the size of the interest payments on the debt as a percentage of the Federal Budget has been growing ever louder like the sounds of thunder on an ever approaching thunder-storm.

I thought I would to highlight a recent article on the topic by Lawrence Lindsey. Mr. Lindsey wrote an Op-Ed article for the June 28th, 2011 edition of the Wall Street Journal titled “The Deficit is Worse Than We Think.”  One of the key thesis of the article is that abnormally low interest rates have artificially reduced the cost of servicing the country’s debt load.  In a very dire warning,  Mr. Lindsey forecasts that if interest rates return to normal level,  the U.S. will incur an additional $4.9 trillion in interest payments over the next ten years.  If that is the case,  then that will be a catastrophe!

The United States can’t tax its way out of this problem.  It is spending that got the United States into this position; and it is cutting spending that will get the United States out of this problem.

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