Peter Coy—Why the debt crisis is worse than you think

Posted by Kendall Harmon

That’s why the posturing about whether and how Congress should increase the debt ceiling by Aug. 2 has been a hollow exercise. Failure to increase the borrowing limit would harm American prestige and the global financial system. But that’s nothing compared with the real threats to the U.S.’s long-term economic health, which will begin to strike with full force toward the end of this decade: Sharply rising per-capita health-care spending, coupled with the graying of the populace; a generation of workers turning into an outsize generation of beneficiaries. Hoover Institution Senior Fellow Michael J. Boskin, who was President George H.W. Bush’s chief economic adviser, says: “The word ‘unsustainable’ doesn’t convey the problem enough, in my opinion.”

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Filed under: * Economics, Politics • Economy • Consumer/consumer spending • Corporations/Corporate Life • Credit Markets • Currency Markets • Housing/Real Estate Market • Labor/Labor Unions/Labor Market • Stock Market • The Banking System/Sector • The Credit Freeze Crisis of Fall 2008/The Recession of 2007-- • The U.S. Government • Budget • Medicare • Social Security • The National Deficit • Politics in General • House of Representatives • Office of the President • President Barack Obama • Senate

3 Comments
Posted July 28, 2011 at 12:24 pm [Printer Friendly] [Print w/ comments]



1. MargaretG wrote:

As an economist in a country that has in the past tried to borrow its way to a solution, I agree that lifting your debt limit is nothing compared to the real issues you face.
Even if you can borrow more, the pressures on the government’s budget from many pressures including the aging population are the real issue.

July 28, 6:51 pm | [comment link]
2. Jill Woodliff wrote:

Prayers may be found here, here, and here.  Also, I encourage folks to consider attending The Response, an ecumenical solemn assembly to pray for our nation August 6 in Houston, TX.

July 28, 9:39 pm | [comment link]
3. Br. Michael wrote:

None of the current plans deal with this.  All they do is reduce rate of spending increase.  They don’t cut anything.  And they are spread out over ten years.  Subsequent Congresses never go through with the reductions so nothing is ever reduced.  It is a one way ratchet that goes ever higher.

That is why the Tea Party Republicans have dug in their heels.  Refusing to raise the debt ceiling is the only tool they have to stop the debt increase.

July 29, 11:01 am | [comment link]
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