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Economic Suicide by Debt or Taxes

Posted By Patrick Tyrrell On May 14, 2010 @ 2:00 pm In Economics | Comments Disabled


An interesting, if alarming Op-Ed in the Washington Times [2] by Ernest Christian and Gary Robbins this week, outlines what is likely to happen due to Washington’s Devil-may-care spending habits. The authors point out that according to the Obama administration’s planned budget, the gross national debt will reach 123% of GDP by 2020. Greece’s Debt to GDP ratio stands at 133% this year [3] however there is no conglomerate of comparable size to the U.S. as The European Union is to Greece so no rescue of America will be imminent. Christian and Robbins aptly describe the future:

Right now, about 42 cents out of every dollar being spent by President Obama is borrowed – mostly from foreigners – and if he continues to stoke the crisis, America’s Triple A bond rating will be downgraded within a few years, the Treasury’s borrowing costs will skyrocket, and Washington will try to inflate its way out of debt by printing lots of cheap new dollars, thereby destroying people’s savings and impairing lives and livelihoods for generations to come. None of this is necessary; it’s Mr. Obama’s choice.

As the 1970’s have receded from memory, so too has the memory of their awful stagflation, of high joblessness and high inflation. If Washington churns out dollars at the printing presses as Christian and Robbins imagine, it will be a giant leap backward to that drab and gloomy time.

The authors go on to warn that the President is soon to offer the American people a choice of poisons with which to commit suicide. Crushing National Debt for all future generations of Americans, or higher taxes in the form of a value added tax—a tax that siphons off a tax at every stage of production for goods and services—ultimately raising the price on everything for consumers. The later would be a self-inflicted injury to the already fragile economy–one we must do without.

The President and members of Congress must reign in spending to avoid a bleak and dreary fate. Until they do, the suicide watch continues.

Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2010/05/14/economic-suicide-by-debt-or-taxes/

URLs in this post:

[1] Image: http://www.foundry.org/wp-content/uploads/Greece-Acropolis-10-5-13.jpg

[2] Op-Ed in the Washington Times: http://www.washingtontimes.com/news/2010/may/10/a-choice-for-the-condemned

[3] 133% this year: http://online.wsj.com/article/SB20001424052748703674704575234404114028636.html?KEYWORDS=IMF+Approves

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