By Quin Hillyer at the Washington Examiner;
For the vast majority of Washington lawmakers now, Greece is the word.
That small Mediterranean country began to suffer its infamous, devastating debt crisis late last decade when its government debt began rising rapidlyabove 100 percent of its Gross Domestic Product. With the binge of tax cutting and outlandishly high spending that President Trump and a majority-Republican Congress are wallowing in, the U.S. is set to boost its debt-to-GDP ratio significantly above its already dangerous level of 105.4. Aside from Greece, only Italy, Belgium, and beleaguered Portugal join the U.S. as Western nations with government debt above 100 percent of GDP.
Greece and Portugal have economies whose GDPs hover right at the $200 billion range – a minuscule one-93rd the size of the U.S. economy. Even the act of bailing out their tiny economies stretched the capacity of the Western world, and neither of those nations is anywhere near out of the woods yet. But no other nation or even collection of them has the capacity to bail out the U.S. if we collapse under our debt load.
What Trump and Congress are doing, indeed already have done with their fiscal incontinence, is putting the entire world economy at risk. And that’s even before considering the expense of Trump’s proposed “infrastructure” package. And it doesn’t fully take into account how expected hikes in interest rates will push federal debt service costs – and thus debt itself – even higher still.
Today’s spending explosion is like Lyndon Johnson’s “guns and butter” policy on steroids, amphetamines, and cocaine at the same time. And what followed LBJ were the extreme economic dislocations of the 1970s, with “stagflation” plaguing the country for years. Yet now, the debt to GDP ratio is more thantwo and a half times greater than it was under LBJ, Richard Nixon, and Jimmy Carter. And growing.
This level of federal-government debt is absolutely unsustainable….
[The full column is at this link.]
