As the end of the year approaches, attention turns to the looming “fiscal cliff,” the agreement to eliminate the Bush-era tax cuts and to cut spending that Congress and the President reached when the Congressional budget “supercommittee” failed to reach a consensus on getting the U.S. fiscal house in order this past year.
And the U.S. fiscal house is definitely not in order. Presently, the national debt stands at $16 trillion. The interest payment alone on this debt is $450 billion annually, based upon present low interest rates. Commitments to social and farming programs also cost the U.S. big each year. According to the Wall Street Journal, in 2011 interest payments on the national debt and our commitments to Social Security, Medicare, Medicaid, and farm subsidies amounted to 63 percent of the U.S. budget. Based upon projected growth in these commitments, by 2025 payments to Social Security, Medicare, Medicaid, and debt service alone will amount to 100 percent of the U.S. budget, leaving no money for education, improving infrastructure, disaster relief and other programs. At the same time, in 2011, the U.S. spent $700 billion on national defense. We spent more on defense than the next 17 nations combined!
When the Congressional budget supercommittee failed to reach a deal this past year, Standard and Poor’s downgraded the U.S. credit rating. Moody’s is waiting to see what the latest negotiations bring before deciding on a downgrade.
Will President Obama and Congress agree to a deal before the end of the year? The latest reports indicate that Speaker John Boehner and President Obama have been meeting in person on a fairly regular basis and that they are discussing ways to both increase revenue and address the rising cost of social programs. Let’s pray that they reach an agreement, and soon!