The federal budget: how will it end?

[snousle]

The series of dramas with budgets and appropriations has got me thinking about how to prepare for however its going to end. It's clear by this point that it isn't going to be pretty

Comments

Re: The budget cannot be balanced...

[snousle]

I didn't condemn them, I merely called the situation "peculiar". Which it is.

Japan is currently working with a 200% debt/gdp ratio, the US is only half way there yet. Their situation offers some good lessons about how a country can decline (relatively) gracefully, although the plight of individual Japanese isn't always pretty. It's not impossible to deal with if the political issues can be resolved. Mandatory spending is not immutable; it can be changed by an act of Congress. Whether this will actually happen is an open question, but even Hal Mason outlines "what can be done" rather than throwing up his hands.

I do think that's a good video, though; it is correct, concise, and non-hysterical. His dour monotone strikes an appropriate mood. :-P

Obama's first term policies cannot really account for the rise in the deficit that occurred immediately before and following the financial crisis. There wasn't enough time. This chart remains the best source I have seen for understanding how it could have been avoided, and after a lot of reading I see nothing incorrect about it:



As for the future, the ACA is the wild card. I have a "wait and see" attitude on that.

Re: The budget cannot be balanced...

[equinas]

I agree that if we were just faced with balancing the budget, it could be done, if government spending went into austerity mode and the private sector stopped hoarding and started investing again. But the government - even the right - are not willing to make the necessary cuts, and the people would never accept the necessary tax increases. Imminent failure.

With regard to the above chart, however, you're talking deficit. I'm talking debt. The huge increase during Obama's first term (more than both Bush terms) shows no sign of slowing with continuing entitlements, bailouts and the CBO's continual upward adjustments of the financial impact of the ACA. The fact is, we really have nothing that is not borrowed. It's unsustainable.