Friday, July 15, 2011

Where the debt comes from

Here's one way to look at it, our current deficits primarily as a revenue issue:
From the WSJ, alternative revenue scenarios:
And here's what the CBO says the long-run spending picture looks like (click to enlarge):
The long-term projected increase in government spending is health-care driven. The rest stays about the same. "Other non-interest spending" is dominated by defense spending. And here is a look at how an aging population and health care inflation are affecting that picture. By 2035, government is projected to spend 16% of GDP purely on entitlements:

But Americans so far have proved unwilling to properly tax themselves to fund those entitlements:If you borrow to pay for things you're spending money on, you incur more debt. Various measures have been presented to deal with the issue, but none agreed upon.

*Update 7/18* Calculated Risk posts an updated chart for archiving here:and Keith Hennessy gives us a summary of the various deficit reduction packages being negotiated, including the numbers.

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