Debt burden holds back recovery

June 27, 2011

Washington’s fiscal irresponsibility has had a tremendous effect on the nation’s economy and Americans’ economic prospects. For years, Congress has authorized spending far more than what money was available. This has, of course, saddled the country with trillions in debt.

Now with the economy struggling to rebound from a devastating recession, the national debt is hampering our already fragile recovery.

The Wall Street Journal explains:

The Federal Reserve is just days away from ending one of the major steps to aid the U.S. economy—but the effort has done little to solve the original problem: The government and individuals alike are still heavily in debt.

The fundamental problem is that reversing the trend of piling on the debt requires some combination of cutting spending, growing income or the economy, and inflation. But wage growth is stagnant and home prices, which underpin much of the debt problem, are still falling.

Meanwhile, in a vicious circle, businesses aren’t hiring or investing because they know consumers are tapped out. Banks, for their part, are hoarding cash, being stingy with new loans.

On the fiscal front, the outlook is worsening. The U.S. government debt-to-GDP ratio will hit 100% this year, up from 62% in 2007, according to the IMF.

The core of Europe is seeing fiscal balances worsening as well. Germany’s debt-to-GDP ratio is expected to be 80% this year, up from 65% in 2008. France will reach 88%, up from 64%, according to the IMF.

The Congressional Budget Office last week forecast that the amount of government debt will reach its highest point relative to the size of the economy since just after World War II.

While Americans struggle to find jobs and make ends meet, Washington has been spending the country deeper and deeper into the red. Congress must institute a culture of responsible spending. Reversing the practices that got us here in the first place is the surest way to allow the recovery to take hold.

 

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3 Responses to Debt burden holds back recovery

  1. Shirley Dees says:

    Washington should cut spending anyway they can. They should not be funding frivolous things like Tea Cup Museums and art resources. Now is not the time for that. While we the American people are trying to get out of the rut Washington is not even seriously looking at cutting back. They should take fewer trips, pay smaller pay rolls, stop being extravagant with Government money for showy dinners, fund raisers, stop the life long funding to politicial family members, but not cut Servicemen wages. Our servicmen give their hearts and souls to our country. They should stop un-necessary spending of immigrants who are illegally here. They won’t starve or go without anymore than anyone else. They need to fix the debt problem and not make it larger. Recovery has to start somewhere so why isn’t it? Greed? Power hungry? What is the reason for delaying?
    Washington shame on you for not doing more. Sure you have expenses- we have them too but the rest of American has to scrape and scrimp to make it while you guys party it up. Shame on you!

  2. Shirley Dees says:

    Washington should cut spending anyway they can. They should not be funding frivolous things like Tea Cup Museums and art resources. Now is not the time for that. While we the American people are trying to get out of the rut Washington is not even seriously looking at cutting back. They should take fewer trips, pay smaller pay rolls, stop being extravagant with Government money for showy dinners, fund raisers, stop the life long funding to politicial family members, but not cut Servicemen wages. Our servicmen give their hearts and souls to our country. They should stop un-necessary spending of immigrants who are illegally here. They won’t starve or go without anymore than anyone else. They need to fix the debt problem and not make it larger. Recovery has to start somewhere so why isn’t it? Greed? Power hungry? What is the reason for delaying?
    Washington shame on you for not doing more. Sure you have expenses- we have them too but the rest of American has to scrape and scrimp to make it while you guys party it up. Shame on you!

  3. Shirley Dees says:

    Washington should cut spending anyway they can. They should not be funding frivolous things like Tea Cup Museums and art resources. Now is not the time for that. While we the American people are trying to get out of the rut Washington is not even seriously looking at cutting back. They should take fewer trips, pay smaller pay rolls, stop being extravagant with Government money for showy dinners, fund raisers, stop the life long funding to politicial family members, but not cut Servicemen wages. Our servicmen give their hearts and souls to our country. They should stop un-necessary spending of immigrants who are illegally here. They won’t starve or go without anymore than anyone else. They need to fix the debt problem and not make it larger. Recovery has to start somewhere so why isn’t it? Greed? Power hungry? What is the reason for delaying?
    Washington shame on you for not doing more. Sure you have expenses- we have them too but the rest of American has to scrape and scrimp to make it while you guys party it up. Shame on you!

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