Donald Trump has been running for 2020 on his wonderful economy, maybe the best in history according to him. Unfortunately for him, that is not true. Had he not called back the bombers from attacking Iran, that would have tanked the economy. Plus, the people who vote for him have not seen a noticeable salary increase for the past 20 years. This item, though, may do him in.
The Congressional Budget Office (CBO) has just released the 2019 Long-Term Budget Outlook. It looked at how the American economy would be doing in the next 30 years. The outlook was based upon the current laws basically staying the same, and that both Social Security and Medicare Insurance pay their “benefits n full even if there were insufficient resources in the trust funds associated with each program.” In other words, if the government kept its promises.
According to the CBO ‘s projections, the existing budget deficits which include an extensive tax cut for the few, “drive federal debt held by the public to “unprecedented levels.”
Debt will increase from the historically high 78 percent of our gross domestic product (GDP) in 2019 to 144 percent by 2049. This was slightly lower than last year’s CBO projection, which did include some variables, the same ones the CBO used for this year. These variables were productivity growth and the interest rate of our federal debt.
Any variable can shift the results dramatically:
‘For example, if the growth of total factor productivity in the nonfarm business sector was one-half of one percentage point higher each year than we project, all else being equal, debt in 2049 would equal 106 percent of GDP; if such growth was one-half of one percentage point lower, debt that year would equal 185 percent of GDP.’
Another variable would be the interest rates:
‘If interest rates were one percentage point lower each year than we project, debt in 2049 would equal 107 percent of GDP; if they were one percentage point higher, debt that year would equal 199 percent of GDP.’
Regardless of the variable, the end result was that unless the existing laws do not change, the nation’s debt will increase substantially. Should the legislators cut discretionary spending now and increase income taxes in 2026:
‘(T)hen debt held by the public would increase even more, reaching 219 percent of GDP by 2049. In the opposite direction, if Social Security benefits were limited to the amounts payable from revenues received by the Social Security trust funds (starting in 2033, when the balances in those funds are projected to be exhausted), debt in 2049 would reach 106 percent of GDP, still well above its current level.’
Some solutions to the problems include the government rescinding Donald Trump’s massive tax cuts to the wealthiest Americans and multi-national corporations. Another suggestion would be for the government to remove the cap on the income amount where people no longer need to pay into the Social Security fund. It makes no logical sense for the lowest income earners to pay regardless of how little they earn, while those earning over $128,400 do not have to anything into it once they reach that “cap”. Billionaires should pay their fair share.
Featured image is a screenshot via YouTube.