Mission almost accomplished. Fail to the Chief:
Even with tax hikes and spending cuts, Mr. Obama’s budget foresees a record budget deficit of $1.6 trillion this fiscal year, sliding down to $706 billion in red ink by 2014, only to begin rising again as the baby-boom generation drives up the costs of Medicare and Social Security. By 2020, the federal debt will have risen from $7.5 trillion—or 53% of gross domestic product—last year to $18.6 trillion, 77% of GDP.
Kenneth Rogoff, a Harvard University economist who has studied other countries’ experiences, says debt levels already forecast would push the U.S. toward a tipping point where interest rates could soar, the dollar could plunge and the economy could face a crisis. “We will hit a point where it comes on us very quickly, and you don’t want to edge up to that point,” Mr. Rogoff said. “Going beyond 80% you’re taking a real chance.”
And this assumes revenues continue as projected, which will not happen, so the tipping point will come sooner than expected.