While funding for Muppets continues to be the focus of the Obama re-elect effort, the government’s finances continue their punishing rise into the red. How bad are things now? Here’s your chart of the day (click to enlarge):
So things are bad and getting worse. Well ahead of schedule, too:
In 2007, the CBO projected that public debt would equal up to half of total U.S. economic output by 2019. In reality, public-debt-to-GDP passed this milestone in 2009 — ten years ahead of the CBO’s 2007 projection. This is not surprising considering the recession that started in 2007, the reduction in GDP and revenue that followed, and the increase in spending.
Since then, if the economy had recovered from the recession, we should have seen some positive changes to the debt-to-GDP outlook. We have not. As you can see on the chart, CBO currently projects that debt will reach 80 percent of GDP by 2014, which is five years ahead of the 2009 projection, and 13 years ahead of the 2007 projection.
Greece, here we come!
The answer, as Veronique de Rugy notes, is to cut spending…and yes, Virginia, that means cutting your own fatted calf, defense spending, too.
But serious spending reductions are unlikely to occur short of a crisis that will make the Great Recession look like a mild bout of economic indigestion. If the chart above is any indication, that episode may happen sooner than the current political class will dare admit.
Given the brutal realities to come, then, is it any wonder the current occupant of the White House has shifted to discussing Muppets?
