The U.S. federal debt is on an "explosive path" if fiscal policy is not adopted fast to raise revenues and cut Medicare spending, according to a new report by the Congressional Budget Office.
In its worst-case scenario, the CBO says U.S. debt could exceed its historical peak of 109 percent of gross domestic product by 2023 and hit 190 percent of GDP by 2035. That is nearly double the debt the country holds right now.
Unfortunately, the CBO gives more credence to this scenario over its best-case prediction because "many budget analysts believe [it]… presents a more realistic picture of the nation's underlying fiscal policies," as well as political realities.
Taking the steps necessary to get the country's fiscal house in order is certainly no easy task for our elected officials. If Congress cuts too much, it risks causing another recession. If it does nothing, or adds another stimulus package to try to speed the recovery, the country's debt problem only worsens.
To debate the issue on whether austerity or more spending it the best road to recovery, The Daily Ticker's Aaron Task sat down with Yaron Brook, president of the right-leaning Ayn Rand Institute, and David Callahan, co-founder of Demos, a liberal think-tank.
Brook is of the mind that government is killing the economy and should just stay out of economics all together.
"I think it is morally wrong to take money from some people and give it to others — take it by force and give it to others," he says. "Jobs are created by private business and what you need is an environment in which private businesses can thrive, and to do that you need to stop taking their money and stop limiting the choices that they have."
Callahan believes quite the opposite. "Most analysts suggest that if there hadn't been the stimulus we would have much higher unemployment than we now have," he say. "We have to do another round of stimulus otherwise this [9.1%] unemployment is going to go on and on and it's going to go on because companies are not hiring — they are not hiring because there is no consumer demand — there is not consumer demand because the middle class is tapped out. They don't have any money."
Watch the debate for more and tell us where you stand on the issue!
- gross domestic product
- Yaron Brook
- fiscal policy
- David Callahan