Why The Debt Crisis Is More Severe Than Everyone Thinks

Business Week:

There is a comforting story about the debt ceiling that goes like this: Back in the 1990s, the U.S. was shrinking its national debt at a rapid pace. Serious people actually worried about dislocations from having too little government debt. If it hadn’t been for two wars, the tax cuts of 2001 and 2003, the housing meltdown, and the subsequent financial crisis and recession, the nation’s finances would be in fine condition today. And the only obstacle to getting there again, this narrative goes, is political dysfunction in Washington.

Read the whole story: Business Week

Comments

[jo smith456]

07:54 AM on 07/31/2011

The MORE DANGEROUS PROBLEMS that US MUST face are DOMESTIC -- 1) lobbyist-control of the US and State congressional elections,due to legalized "election finance contribution" (a.k.a. "vote buying") 2) rampant unemployment, 3) robbery and theft by wall-street financial terrorists -- FedReserve, banks, hedge funds, insurance firms, cable/telecom providers, corrupt credit raters, etc. 4) MSM control of the minds of the american citizenry, 5) massive mismanagement and allocation of TRILLIONS (NOT BILLIONS) of US financial resources (wars, wall street bailouts, bonuses for wall street executives,etc.), 6) financial aid/help/guarantees that we give to some spoiled (and embarrassing) countries...

Elections are NOT effective anymore as they are influenced by moneyed lobbyists and biased MSM; it's time for massive RALLIES/DEMONSTRATIONS/PROTESTS--- People Power!!! Fellow Americans, rise up. Take back our power!!!

[babyboomerorig]

01:21 PM on 07/30/2011

My question on this is what is going to happen to smaller, local banks. How safe is the FDIC in protecting money under $250,000?

[bk1]

05:56 PM on 07/29/2011

Our debt "crisis" is the product of our prioritization, not our potential. We can restructure our tax system to make it more equitable. Just taxing capital gains as income on everything above 401K limits would raise hundreds of billions. This is one of the major reasons why people like Warren Buffett pay less tax than his office assistants. Our military spending as a percentage of the GDP is larget than the next 10 economies in the world COMBINED. That is a priority that must change. Tax subsidies for corporations and industries are expenses that we are incurring in our country as well. Our debt "crisis" may we be one of government entitlements, but raiding Medicare, Medicaid and Social Security are not the only answer to the resolution of the problem.

[NeverUndecided]

12:13 AM on 07/29/2011

Right. Business Week. A bastion of superlatives, by light years the most penetrating, thoughtful, objective, perceptive, insightful, prescient, money-proofed rock of integrity ever seen in print.

A two trillion dollar feed at the trough for the wealthy has nothing to do with it.

[rdimitrir]

12:10 AM on 07/29/2011

Wealth tax is the answer.

[cabinetmaniac]

09:13 AM on 07/31/2011

Yes it is.

☮

[Grannysue]

11:18 PM on 07/28/2011

Bring home the troops in Iraq and Afghanistan and stop sending them and Pakistan MONEY, that would be a very LARGE down payment on the deficit!!!

[April22]

10:50 PM on 07/28/2011

End the damn wars already.

They reek of war profiteering for energy industries, corporations and military contractors and add Washington politicians to that list, too

Then our budget problems would be well on their way to being healed, maybe even the world.

[gonewiththebid2]

10:10 PM on 07/28/2011

Its time to pay the piper! This is what happens when we deregulate the banks, stock market, rage war for over 30 years, and send companies overseas or over the border for cheaper labor (NAFTA). Now with the federal government insuring all student loans, it is now impossible to wipe out student loans by filing for bankrupcy. You can expect to see our future generations heavily in debt. Even know there are kids working at Mc Donalds with college degree and huge student loans. How are they suppose to pay the money back if the only job they find pays $7 an hour. If you owe over 70K the monthly payments alone will be more than what you make at Mc. Donalds. Don't expect them to get us out of this huge hole we are in.

[Steve Rockett]

07:10 PM on 07/28/2011

More jobs=more taxes. Tax the rich=more taxes. Strong economy=more taxes. Rid government waste=closer to a balanced budget. Firing government workers=catastrophe. Politically based deficit reduction= catastrophe. Raise the debt ceiling for 5 years=stable markets.

[mcmutter]

10:50 PM on 07/28/2011

that book is cr.ap

[Chester Erickson]

02:03 AM on 07/29/2011

Spam

[wesx]

06:01 PM on 07/28/2011

It is bad go to the debt clock and look at unfunded debt and then click on your state and look at unfunded debt.

[Reincarnation TPS]

05:56 PM on 07/28/2011

Greetings and salutations......................

[yeswecanjane]

05:47 PM on 07/28/2011

Wow! I thought this was all a game. The debt ceiling could be raised using one piece of paper!

[April22]

10:52 PM on 07/28/2011

That's correct. So why are both parties cutting social programs now?

[yeswecanjane]

11:47 AM on 07/29/2011

And they are after families of four making under $50,000 to pay for the Federal debt that was given to American tax payers by the Republicans and their wealthy overlords:) Now they want the Republicans to take away earned income credit and medical support for all but those disabled.(Under their definition of disabled) Vote in Progresssive! They want to get America back to work!

[sophie M]

05:42 PM on 07/28/2011

i just think about how many times .it was passed .....before i even realized what a debt ceiling was............when we were kids..
i am not going to worry about it now.
altho i have learned what suck pols we have WORKING FOR US...shall i say ....
THEMSELVES.
i don't care. . because it does no good to care.

[nopilikia]

05:27 PM on 07/28/2011

Whatever the outcome the pain should start with those that gained the most.....then work its way down to those who gained the least. Trillions in bailouts, two unfunded wars...one started on questionable intell.....corporate tax loopholes.....the American family making less than $35,000.00 per year or the underemployed and unemployed gained nothing and are more likely victims of preverted tax policies and trillion dollar bailouts of banks and corporations.