captfurlough

In the 1940's federal debt was obviously due to WW2....we didn't have a choice. True, there were issues with unemployment and a slowdown for returning vets, but in the decades that followed growth, prosperity, and an expanding economy (building homes, baby boom, etc.) allowed the debt to be repaid.

The situation today is much different...a global economy in which it is very much harder for the US work force to be competitive. The US is no longer the producer / exporter of the worlds goods, and it was the manufacturing capacity of the country, developed in WW2, that was the basis of the development of wealth. Today the US is a leading consumer of goods...wealth leaves the country to pay for these items produced overseas. This leaves the US with a service based economy, which, without a manufacturing base, can not be sustained in the long run. (Where does the wealth come from to be in a position to purchase a service?)

Today the middle class tax base is shrinking. (The ultra wealthy become richer and the numbers families in poverty are increasing.) In addition, the ability to grow and prosper is limited in the competitive global economy of today, making the collection of future tax revenues more questionable. Unbridled spending today...with money that isn't based on assests... means that every dollar is simply worth less, and eventually that must translate into inflation. Inflation that hits the baby boom retirement (a generation that is already woefully unprepared for retirement) couild likely bring on a crisis.

At some point, there is some risk that China and other investors will slow their purchase of US Treasuries, making borrowing more difficult. All of this is not certain, but most analysts agree there is significant risk.

On a personal level, I don't like the federal government putting me in debt well beyond what I can afford...the idea of owing $160,000 (my family's share of the US debt) and borrowning more is staggering.

jungle

Your numbers are dead wrong. Post WWII recovery was rapid because most of the world's major economies outside of the US were destroyed. There is no such salvation this time around.
--------------------------------------------------------------------

Take a look at the CBO figures and then apply a little understanding to their method of accounting. It is far more dire than most believe:




US Government 'hiding true amount of debt' By Gregory Bresiger From: NewsCore September 20, 2010 9:09AM Increase Text SizeDecrease Text
THE actual figure of the US' national debt is much higher than the official sum of $US13.4 trillion ($14.3 trillion) given by the Congressional Budget Office, according to analysts cited on Sunday by the New York Post.
"The Government is lying about the amount of debt. It is engaging in Enron accounting," said Laurence Kotlikoff, an economist at Boston University and co-author of The Coming Generational Storm: What You Need to Know about America's Economic Future.

"The problem is we're seeing an explosion in spending," added Andrew Moylan, director of government affairs for the National Taxpayers Union.

In 1980, the debt - the accumulated red ink incurred by the Federal Government - was $US909 billion.

This represented some 33 per cent of gross domestic product, according to the Congressional Budget Office (CBO).

Thirty years later, based on this year's second-quarter numbers, the CBO said the debt was $US13.4 trillion, or 92 per cent of GDP.




The CBO estimates the debt will be at $US16.5 trillion in two years, or 100.6 per cent of GDP.

But these numbers are incomplete.

They do not count off-budget obligations such as required spending for Social Security and Medicare, whose programs represent a balloon payment for the Government as more Americans retire and collect benefits.
In the case of Social Security, beginning in 2016, the US Government will be paying out more than it is collecting in taxes.

Without basic measures - such as payment cuts or higher payroll taxes - the system could be on the road to bankruptcy, according to officials.

"Without changes," wrote Social Security Commissioner Michael Astrue, "by 2037 the Social Security Trust Fund will be exhausted. There will be enough money only to pay about $US0.76 for each dollar of benefits."

Mr Kotlikoff and Mr Moylan agree US national debt is much more than the official $US13.4 trillion number, but they disagree over how to add up the exact number.

Mr Kotlikoff says the debt is actually $US200 trillion.

Mr Moylan says the number is likely about $US60 trillion.

That is close to the figure quoted by David Walker, the US Comptroller General from 1998 to 2008.

He launched a campaign to convince Americans that the federal spending and debt is a greater threat than terrorism.

But whichever figure is accurate, all three agree that the problem has worsened in the last few years.

They say it is because Congress and the Administration, whether Republican or Democrat, consistently overspend.



Read more: US Government 'hiding true amount of debt' | News.com.au

captfurlough

It will also help to understand, that of those business sectors which remain viable in the US economy, a certain percentage are seeing foreign investment and even foreign ownership, meaning that profits and cash flows may be redirected offshore. Real estate investors are also coming from offshore. In other words, not only has US manufacturing been affected by offshore competition, but US assets are subject to quick cash outs buy owner's willing to sell to outside interests. In short, the US is losing some of, or a significant portion of, its ability to develop wealth. Remember that this capacity is what enabled a middle class to emerge and develop.