Fiscal Cheat Sheet: [Ir]Responsible Governing
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We thought it might be helpful to re-release our “Fiscal Cheat Sheets,” which outline key economic and fiscal repercussions of government overspending. Please see below for an excerpt from “[Ir]Responsible Governing,” and click on the document name to view it in its entirety.
While Washington’s overspending problem clearly isn’t new — it has cumulatively overspent to the tune of $13.7 trillion – it has grown significantly worse.
Economists of every political stripe have warned that failing to get spending and debt under control will lead to dire consequences, including higher taxes, higher costs of living, slower economic growth, and fewer jobs. Despite strong evidence of spending-policy failure, and clear warnings of the consequences of out-of-control debt, Washington continues to overspend at an alarming rate: the deficit for fiscal year 2010 was the second highest in the nation’s history at $1.29 trillion (last year’s $1.41 trillion deficit was the highest).
So what does this mean for the future?
Between 2011 and 2020 interest payments on the debt, adjusted for inflation, will nearly triple – spiking from $221 billion to $637 billion. As servicing the debt becomes more expensive, policymakers will likely contemplate major tax increases, or an increase in the money supply.
By 2020, interest payments and entitlement programs (e.g., Medicare and Social Security) will alone consume more than 90% of projected federal revenues. This means just 10 percent of tax revenue will be left to fund all other government functions: from defense to education.
For more of our “Fiscal Fact Sheets,” check out today’s re-release of “Unsustainable Spending,” and check back tomorrow for “Consequences” and “Uncertainty.”