Excessive spending has created record levels of debt and deficits, and the worst is yet to come, threatening opportunity and prosperity for younger generations. In these 10 charts, via The Heritage Foundation, we highlight the third (and arguably most frightening) in our four-part series on the Federal Budget - Debt & Deficits.
Publicly Held Debt Set to Skyrocket
Runaway spending on Medicare, Medicaid, and Social Security will drive federal debt to unsustainable levels over the next few decades. Total national debt consists of publicly held debt and intergovernmental debt. Intergovernmental debt is the amount that the government owes to specific programs or agencies, such as the Social Security Trust Fund. Publicly held debt is more relevant to credit markets.
Each American's Share of Publicly Held Debt Is Skyrocketing
As Washington continues to spend dramatically more than it can afford, every American will be on the hook for increasing levels of debt. Without reining in spending, the amount of debt per citizen will skyrocket.
Obama's Budget Fails to Solve the Debt Crisis Despite $2 Trillion in Tax Hikes
In 2008, publicly held debt as a percentage of the economy (GDP) was 40.5 percent, nearly four points below the post-World War II average. Since then, the debt has increased by 45 percent. The President's FY 2013 budget would increase the debt to 76.5 percent by 2022, despite $2 trillion in tax hikes.
Obama's Budget Continues Unprecedented Deficits
The President is responsible for submitting an annual budget to Congress and has the authority to veto legislation, including irresponsible spending. Most Administrations have run small but manageable deficits, but President Obama's unprecedented budget deficits pose serious economic risks.
Federal Budget Deficits Will Reach Levels Never Seen in the U.S.
Unless entitlements are reformed, spending on Medicare, Medicaid, and Social Security will drive deficits to catastrophic levels. While recent budget deficits have reached unprecedented levels, future deficits will be dramatically worse.
Rising Deficits Drive U.S. Debt Limit Higher, Faster
The Budget Control Act, a result of the contentious 2011 debt ceiling debate, increased the debt limit by $2.1 trillion, but failed to rein in the key driver of spending and debt: entitlement spending. Congress first placed a statutory limit on the national debt in 1917, in the Second Liberty Bond Act. It has been raised 13 times since 2001.
Interest On the Debt Will Nearly Double Over the Next Decade
As the publicly held debt grows, net interest payments will increase dramatically, even assuming that interest rates remain low. Under current projections, real net interest costs would more than double over the next decade.
Interest on the Debt Exceeds Spending for Many Programs
In 2011, the U.S. spent more on net interest—interest paid on publicly held debt—than it spent on many federal departments, including Education and Labor.
U.S. Debt on Track to Fuel Economic Crisis
Many European countries, like Greece and Italy, are suffering financial or budget crises as a result of mounting debt. Countries such as Spain are not far behind. Unless the U.S. controls spending, America's debt will surpass those of troubled nations, leading to similar economic woes.
Debt to Grow Unless Government Spending Is Reduced
Without significant spending reforms, publicly held debt is projected to reach 187 percent of GDP by 2035. Under the Heritage plan, Saving the American Dream, future federal spending would be reduced by about half, which would dramatically lower the debt to 29 percent of GDP.
Source: The Heritage Foundation