The CBO report, "Federal Debt and the Risk of a Fiscal Crisis," points out that the national debt, which was 36 percent of the Gross Domestic Product three years ago, is now projected to be 62 percent of GDP at the end of fiscal year 2010-- and rising in future years.
Tracing the history of the national debt back to the beginning of the country, the CBO finds that the national debt did not exceed 50 percent of GDP, even when the country was fighting the Civil War, the First World War or any other war except World War II. Moreover, a graph in the CBO report shows the national debt going down sharply after World War II, as the nation began paying off its wartime when the war was over.
By contrast, our current national debt is still going up and may end up in "unfamiliar territory," according to the CBO, reaching "unsustainable levels." They spell out the economic consequences-- and it is not a pretty picture.
As the Congressional Budget Office puts it, if the national debt continues to grow out of control, a "growing portion of people's savings would go to purchase government debt rather than toward investments in productive capital goods such as factories and computers; that 'crowding out' of investment would lead to lower output and incomes than would otherwise occur."
Just paying the interest on a growing national debt can require higher tax rates, which "would discourage work and saving and further reduce output," according to the CBO.
As Thomas Sowell, in his article on these matters on August 4th noted, it would probably do no good to send Robert Gibbs-- or Barack Obama, for that matter-- a copy of the government's own Congressional Budget Office report. Spending vast sums of money in politically strategic places helps the Obama administration politically, and that is obviously their bottom line.
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