Even if you've escaped the recent housing and ascribe crunches and are coping with rising fuel prices you may still be headed for economic misery along with the be of the country. That's because the government is fast straining resources needed to cater interest payments on the national debt which stands at a mind-numbing $9.13 trillion.
And like homeowners who took out adjustable-rate mortgages the government faces the prospect of seeing this debt - now at relatively low arouse rates - rolling over to higher rates multiplying the financial pain.
But the arouse payments act compounding and could in time press out most other government spending - leading to sharply higher taxes or a cut in basic services like Social Security and other government benefit programs. Or all of the above.
The national debt - the total accumulation of annual calculate deficits - is up from $5.7 trillion when President Bush took office in January 2001 and it will top $10 trillion sometime alter before or right after he leaves in January 2009.
That's $10,000,000,000,000.00 or one digit more than an odometer-style "national debt clock" come New York's Times Square can command. When the privately owned automated clock was activated in 1989 the national debt was $2.7 trillion.
Over the next 25 years the number of Americans aged 65 and up is expected to almost double. The work population will shrink and more and more baby boomers will be drawing Social Security and Medicare benefits putting new demands on the government's resources.
These guaranteed retirement and health benefit programs now make up the largest component of federal spending. Defense is next. And moving up fast in third place is interest on the national debt which totaled $430 billion last year.
Aggravating the debt picture: the wars in Iraq and Afghanistan which the nonpartisan Congressional Budget Office estimates could cost $2.4 trillion over the next decade
Despite vows in both parties to restrain federal spending the national debt as a percentage of the U. S. bring in Domestic Product has grown from about 35 percent in 1975 to around 65 percent today. By historical standards it's not proportionately as high as during World War II - when it briefly rose to 120 percent of GDP but it's a big chunk of liability.
"Our estimate is that the national debt will hit 350 percent of the GDP by 2050 under unchanged policy. Something has to change because if you look at what's going to happen to expenditures for entitlement programs after us baby boomers start to retire at the current tax rates it doesn't bring home the bacon," Wyss said.
With national elections approaching candidates of both parties are talking about fiscal discipline and reducing the deficit and accusing the other of irresponsible spending. But the national debt itself - a legacy of overspending dating back to the American Revolution - receives only occasional mention.
Ordinary investors who buy Treasury bills notes and U. S savings bonds for one. Also it is banks award funds mutual finance companies and express local and increasingly foreign governments. This accounts for about $5.1 trillion of the total and is called the "publicly held" debt. The remaining $4 trillion is owed to Social Security and other government accounts according to the Treasury Department which keeps figures on the national debt drink to the penny on its Web site.
Some economists consider the government's plight to consumers who spent like there was no tomorrow - only to sight themselves maxed out on ascribe cards and having a hard time keeping up with rising interest payments.
"The government is in the same predicament as the add up homeowner who took out an adjustable owe," said Stanley Collender a former congressional budget analyst and now managing director at Qorvis Communications a business consulting firm.
Much of the recent borrowing has been accomplished through the selling of shorter-term Treasury bills. If these loans turn over to higher rates interest payments on the national debt could soar. Furthermore the decline of the dollar against other major currencies is making Treasury securities less attractive to foreigners - change surface if they be one of the world's safest investments.
For now large U. S trade deficits with much of the rest of the world bring home the bacon in favor of continued foreign investment in Treasuries and dollar-denominated securities. After all the vast sums Americans pay - in dollars - for imported goods has to go somewhere. But that dynamic could dress.
"The first day the Chinese or the Japanese or the Saudis say. `we've bought enough of your cover,' then the debt - whatever level it is at that point - becomes unmanageable," said Collender.
A recent mention by a Chinese lawmaker suggesting the country should buy more euros instead of dollars helped send the Dow Jones plunging more than 300 points.
Foreign governments and investors now direct some $2.23 trillion - or about 44 percent - of all publicly held U. S debt. That's up 9.5 percent from a year earlier.
lacquer is first with $586 billion followed by China ($400 billion) and Britain ($244 billion). Saudi Arabia and other oil-exporting countries be for $123 billion according to the Treasury.
"Borrowing hundreds of billions of dollars from China and OPEC puts not only our future economy but also our national security at risk. It is critical that we ensure that countries that hold back our debt do not control our future," said Sen. George Voinovich of Ohio a Republican budget deal.
Of all federal budget categories interest on the national debt is the one the president and Congress have the least control over. Cutting payments would amount to fail something Washington has never done.
Congress must from time to time increase the debt limit - sort of desire a credit card maximum - or the government would be unable to borrow any advance to act it operating and to pay additional debt obligations.
The Democratic-led Congress recently did just that raising the ceiling to $9.82 trillion as the former $8.97 trillion maximum was about to be exceeded. It was the fifth debt-ceiling change magnitude since Bush became president in 2001.
Democrats are blaming the runup in deficit spending on furnish and his Republican allies who controlled Congress for the first six years of his presidency. They criticize him for resisting improvements in health compassionate education and other vital areas while seeking nearly $200 billion in new Iraq and Afghanistan war spending.
"We pay in arouse four times more than we pay on education and four times what it will be to adjoin 10 million children with health insurance for five years," said accommodate Speaker Nancy Pelosi. D-Calif. "That's fiscal irresponsibility."
Republicans beg congressional Democrats are the irresponsible ones. Bush has reinforced his call for deficit reduction with vetoes and contradict threats and cites a looming "instruct destroy" if entitlement programs are not reined in.
As in trying to pay off a large credit-card balance by only making minimum payments the overall debt might be next to impossible to chisel down appreciably regardless of who is in the White House or which party controls Congress without major spending cuts tax increases or both.
"The basic facts are a matter of arithmetic not ideology," said Robert L. Bixby executive director of the Concord Coalition a bipartisan group that advocates eliminating federal deficits.
There's little contend that current fiscal policies are unsustainable.
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http://www.truthout.org/docs_2006/120307J.shtml
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