But it’s even worse than I thought: the level of federal indebtedness has moved beyond mere profligacy into a new realm of total financial fantasy. The national debt is about to surpass the net worth of every man, woman, and child in the USA.
According to The Washington Times:
Federal spending soars 25% before bailout
Taxpayers get $1 trillion debt
The government’s spending commitments exploded by 25 percent in 2008, putting taxpayers more than $1 trillion in the hole even before the astronomical costs of the economic bailout were taken into account, according to an annual report released Monday by the White House.
A joint report by the White House budget office and Treasury Department said that much of the increase in obligations came from an unexpected jump in veterans benefits liabilities, while revenues remained mostly flat because of the recession that began a year ago.
Jim Nussle, director of the White House Office of Management and Budget, called the report “sobering.”
On the contrary, it’s enough to make a man run down to the liquor store with what little money remains to him and clear the shelves of Jim Beam before all the distilleries file for Chapter 11.
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The report showed that U.S. debts and liabilities are close to passing the value of the U.S. population’s net worth, said Peter G. Peterson Foundation, a nonprofit organization devoted to promoting fiscal responsibility.
That’s the bad news.
The good news is that this situation is not going to last long. One way or another, the current mess will be resolved, and soon.
Here are some possible outcomes:
|1.||The federal government declares bankruptcy.|
|2.||The incoming Obama administration caps all the federal COLAs and then prints a lot of new money, thereby inflating its way out of the crisis. Everybody’s 401k would be reduced permanently to 10% of its former value, and pensioners would be living on dog food, but, hey — it’s worth it to keep the CEOs of GM and Ford in plush corner offices, right? Sometimes we have to sacrifice our own needs in a good cause.|
|3.||A mass flight from the dollar forces a severe devaluation on the USA. What happens after that is anybody’s guess.|
Readers with more financial expertise than I have are welcome to add their own prognostications to this list.
The government is counting on us. We’ll have to find that money somewhere. Reach into the cookie jar or under the mattress and see if you can dig out another sawbuck or two.
Uncle Sam wants YOU.