Here's another model for Deficit vs. GDP; uh oh.
"UGLY TO BEHOLD." What's more, efforts to cut spending are going nowhere. When the House Budget Committee tried to balance the budget by trimming more than $450 billion from programs such as Medicare, Medicaid, and farm aid, the plan was eviscerated by GOP leaders. "We are in the midst of a Republican spending spree that's ugly to behold," says Stephen Moore, president of the Club for Growth, a conservative Washington-based advocacy group. "We could see $500 billion deficits for years."
Economists Alan Auerbach of the University of California at Berkeley and William G. Gale of the Brookings Institution estimate a long-term fiscal deficit of between 4% and 8% of GDP -- a level not seen since the U.S. was paying off the cost of World War II. They reckon it will require tax hikes or spending cuts of 20% to 38% to bring the budget back into balance.
And the longer you look into the future, the worse the numbers get. In 2040, even the White House estimates that deficits will skyrocket to 8.8% of GDP. By 2060, they'll double again, to 17.5%, if nothing is done.
And Moody's is turning it's nose up on Germany's sovereign debt, with an estimate of 3.4% deficit to GDP, ho ho.
What was the Dow 30 when we were paying off WWII debt?
James |
