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ATLANTA, GA, November 01, 2020 /24-7PressRelease/ -- Allen Buckley, a fiscal conservative independent candidate in the special election race for the U.S. Senate seat currently held by Kelly Loeffler, says, on its current path, the U.S. is approximately 15 years away from a financial disaster. He bases his outlook mainly on a recent publication of the Congressional Budget Office (CBO), plans set forth by President Trump and former Vice-President Biden, and the lack of appreciation of the nation's financial problems by the media and most of the public.
On September 21st, the CBO issued its latest long-term budget outlook. It paints a vivid picture of a nation slowly being destroyed by debt. The CBO report states that by 2043, net interest expense is expected to cost more than all discretionary spending combined. By 2050, interest expense will equal 44 percent of tax revenue. These are rosy projections, as they assume all tax breaks of the 2017 act set to expire in 2026, expire. History shows, that won't happen.
The interest rates used to reach these potentially catastrophic conclusions are relatively low. On page 21, the CBO report states: "Notably, the interest rate on 10-year Treasury notes rises from an average of 0.7 percent in mid-2020 to 3.2 percent in 2030 and 4.8 percent in 2050—one percent below the 5.8 percent average recorded over the 1990-2007 period." On page 15, the report states: " . . . if the average borrowing rate was 1 percentage point higher every year than the rate underlying the agency's extended baseline projections, but all other aspects of the economy were unaffected, then the government's net interest costs would amount to about 15 percent of GDP 30 years from now . . . [t]hat amount is about four-fifths of federal revenues projected for 2050." Generally, the riskier the debtor, the more interest it must pay.
Commenting in a Spring 2017 edition of The International Economy, Michael Hüther of Stanford University said: "A government loses its democratic legitimacy if it start[s] paying a too-high share of its income on interest." At some point much sooner than 2050, the percent of revenue needed to cover interest will exceed 25 percent (no matter what happens—on the current path). Then, social unrest very likely will become a major problem.
In 2007, when our national debt was under $9 trillion, the Government Accountability Office said: "GAO's current long-term simulations continue to show ever larger deficits resulting in a federal debt burden that ultimately spirals out of control." Now, total debt exceeds $27 trillion. Annual revenue has never topped $3.5 trillion. The U.S. hasn't balanced a budget since 2001.
On October 7, 2020, the Committee for a Responsible Federal Budget (CRFB) said: "Under our central estimate, we find President Trump's campaign plan would increase the debt by $4.95 trillion over ten years and former Vice President Biden's plan would increase the debt by $5.60 trillion. Debt would rise from 98 percent of GDP today to 125 percent by 2030 under President Trump and 128 percent under Vice President Biden, compared to 109 percent under current law." The costs exclude spending to address the current pandemic and economic crisis.
A March 7-8, 2020 Wall Street Journal article titled "Global Outbreaks Are Likely to Continue" includes the following quote from Peter Daszak, president of EcoHealth Alliance, a New York-based nonprofit research group that built a database tracking disease events locally: "I'm not holding in my bunker right now. We're going to get hit by a much bigger one sometime in the next 10 years." Earlier this year, the CBO said, from a financial perspective, it would take roughly a decade for the U.S. to recover from COVID-19.
The two major parties used the Great Recession as justification for running up over $8 trillion of debt after it ended. The COVID-19 pandemic has produced much worse economic conditions than the Great Recession. Based on past practice, very large deficits can be expected in over the next decade. Brian Riedl of The Manhattan Institute expects average deficits of approximately $2 trillion per year over the next decade.
Buckley said: "Putting all the pieces together, on our current path, I believe the U.S. is approximately 15 years from a financial disaster. There are too many negative moving parts, with very little public appreciation of the nation's financial problems. We won't outgrow the problem. What's happening makes sense if the world will come to an end soon. Otherwise, it's insanity for those who have any sense of patriotism or responsibility. Investments are now being negatively impacted, and they will be impacted more heavily by the growing debt as time goes on. In its September 21st report, the CBO very specifically lays out the danger of a fiscal crisis. It sees it coming. Public unrest from what is coming will make BLM seem tame. Solutions to the problems exist, such as those I've laid out. But, they require reasonable sacrifice."
Buckley's "Save Tomorrow" campaign is about living for today and tomorrow, instead of living for today to the detriment of tomorrow. The focus is on doing things to make tomorrow as good as or even better than today, by acting now to address the nation's financial challenges and confronting global warming in a practical way. Mr. Buckley can be reached for comment at (404) 610-1936. Mr. Buckley's campaign website is www.buckleyforsenate.org.
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