Is the U.S. going broke?
 

Per Yahoo News:

'The U.S. House of Representatives on Thursday voted to increase the federal credit limit by $800 billion to $8.184 trillion, a move that will allow the measure to be sent to President Bush (news - web sites) for signing into law.

The House voted 208 to 204, largely along party lines, to support the measure, which Democrats say is necessary because of the Bush Administration's irresponsible fiscal policies. The Senate approved the rise, the third in as many years, on Wednesday night.'

Re: Is the U.S. going broke?
 

The size of the current deficit isn't significant. However, I believe the Republicans in the Congress are going to put Bush's feet to the fire on the issue. Since Bush hasn't proposed any new big spending programs (like education and presciption drugs in Bush's first term), I think the deficit won't be an issue at all by 2008.

Re: Is the U.S. going broke?
 

If the financial markets thought the US was in any kind of trouble, don't you think our Treasury bond rates would be higher?

Re: Is the U.S. going broke?
 

You can't look at the deficit in a vaccuum. You have to look at it in relation to the economy. Yes, we have a record deficit. But we also have a record GDP. It's like comparing someone with the credit card debt for a person that's able to earn $30K a year with a person able to earn $250K a year.

Re: Is the U.S. going broke?
 

Maybe not broke, but there will certanly be problems
Oil headway will fail to meet demand
Oil: Is the end at hand?

Without cheep oil the US economy will find it hard to grow, making it a rough ride with all that dept.

Re: Is the U.S. going broke?
 

But the Social Security partial privatization will, if it follows the Moynihan Commission recommendation, which Bush seems to favor, lower the government's intake by 2%. Assuming this, or something similar goes into effect, the tax cuts are made permanent, which seems likely, and the war in Iraq continues for a while (and/or we do something in Iran), it seems likely the deficits will continue to be quite large. The President has talked about cutting them in half, as a target, by the end of his term.

Isn't the debt (as opposed to the deficit) a problem in that we'll soon have a situation where the interest payments on the debt are over 10% of the budget?

Re: Is the U.S. going broke?
 

I think it is time to thank you Bush voters. Thanks to irresponsible deficit policy, my USD short is making me riiiiccchhhh.
Really, thank you.
J.

Re: Is the U.S. going broke?
 

[ QUOTE ]
But the Social Security partial privatization will, if it follows the Moynihan Commission recommendation, which Bush seems to favor, lower the government's intake by 2%.

[/ QUOTE ]

However, the overall liability decreases therefore in outlying years not as much money will be need to fund S.S. Borrow some money at low rates now to save lots of money later is the intention.

[ QUOTE ]
Isn't the debt (as opposed to the deficit) a problem in that we'll soon have a situation where the interest payments on the debt are over 10% of the budget?

[/ QUOTE ]

So?

Federal Net Interest payments as a percentage of outlays since 1992:

1992 == 14.4%

1993 == 14.1%

1994 == 13.9%

1995 == 15.3%

1996 == 15.4%

1997 == 15.2%

1998 == 14.6%

1999 == 13.5%

2000 == 12.5%

2001 == 11.1%

2002 == 8.5%

2003 == 7.5%

2004 == 7.9% (estimated)

2005 == 8.7% (estimated)
U.S. Historical Budget Data

BTW I believe the highest net interest payment on the deficit in absolute terms was for fiscal year 2000.

Good Econony = Tax Surplus, Bad Economy = Tax Deficits
 

The Democrats, with the help of the mainstream media, have semi-successfully blamed the downturn of the economy on Bush even though Bush's economic plan was not even IMPLEMENTED untill several months after his election. THEN, the Democrats choose the ignore the impact that 9/11 had on the economy.

The economic data shows the downturn of the economy occurred at the end of the ***CLINTON presidency***. And my 401K returns reflected this.

Tax cuts stimulate the economy. When tax cuts are implented, the benefits of the tax cuts occur betweeen one and two years after the implementation of the cuts. Bush can be criticize for not using his veto pen, signing the farm bill, and for signing the prescription drug plan. BUT....the current deficits are largely a function of the health of the economy. Now that the tax cuts have been implemented and several months have passed since 9/11, the next few months will be a true test on Bush's economic plan....

Re: Is the U.S. going broke?
 

I'm curious Dynasty, as to why you don't think the deficit will be an issue by 2008. Even given the lack of big spending programs, the deficit from the first four years of this administration came primarily (more than 50%) from a revenue drop, not spending problems.

With a weak economy, a rapidly falling $, interest rates rising steadily and higher oil prices, I don't see anything that is going to change the deficit situation.