We've let the politicians mortgage our future for our present. It was bound to catch up with us eventually. Perhaps this will encourage those in Washington to figure out how to save money lest they all find themselves out of work.
"Catch up" and lead to a situation where even the higher of the estimates has interest payments at a level that "Most economists and budget experts would agree [...] are manageable for an economy"?
Not seeing the problem.
http://www.automaticfinances.com/monkey-stock-picking/
http://www.theguardian.com/science/2012/jul/08/this-much-i-k...
http://www.newyorker.com/magazine/2005/12/05/everybodys-an-e...
If I build bridge after bridge and they all fall down at some point you're going to have to wonder if my engineering degree is worth even the paper it's printed on.
An expert whose expertise is little better than chance can't really be called an expert, no matter how impeccable their credentials or how long their career.
You do realize that the whole thing you are trying to get us scared about is, itself, a prediction of future levels of debt service costs relative to other government expenditures by CBO and OMB economists and budget experts.
So, if you believe economists and budget experts, then (a) you have a basis for believing the situation you are trying to raise concerns about will occur, but (b) you likewise have the same basis for believing that the situation won't be a problem.
Conversely, if you don't believe economists and budget experts, (a) you don't necessarily have a reason to believe that the situation you are concerned about would not be a problem, but (b) for the same reason, you also don't have a reason to believe that the situation you are concerned about will actually occur.
If you want to make the claim that the situation predicted by CBO and budget experts will occur and that if it occurs, it wwill be a problem, you need more of an argument than "economists and budget experts are sometimes not better than chance at predicting some things".
There's a HUGE difference between extrapolating a trend which shows no signs of slowing, and "predicting" that it will in fact be no problem whatsoever. Extrapolating a trend requires no particular expertise.
But judging the impact of a particular cashflow on an economy as a whole, well, that's a much bigger deal. How do they "know" that it won't be a problem? Can they assure us we won't enter yet another war and have to print money even faster? Are they confident that inflation will never get away from us? Have we already dodged and will we continue to dodge the liquidity trap? What happens if deflation takes over in the US -- like it has in Japan -- despite heroic levels of QE?
Given that economists are unable to answer those questions plausibly (i.e. they can't accurately predict the future) it stands to reason that their assumption (which is what it really is) that the level of debt service is OK is a bit questionable in my mind.
Remember, extending a trendline on a single metric (US debt or interest payments) and doing the same on a million metrics (everything that makes up the US economy) are two WILDLY different things.
Those predictions necessarily involve predictions of revenue levels (and thus, general economic performance, and thus, the impact of debt service levels on general economic performance) for all the intervening years.
Which means accepting them means accepting that the "experts" involved can predict the impact of debt service levels on general economic performance, which is exactly the thing you have to assume they cannot do to dismiss the relevance of economists and budget experts opinion on the final condition.
> Remember, extending a trendline on a single metric (US debt or interest payments) and doing the same on a million metrics (everything that makes up the US economy) are two WILDLY different things.
Debt service costs are a product of: 1) Starting debt levels, 2) Government revenue vs. expenditures in the intervening period, and 3) Cost of borrowing for the government in the intervening time.
Note that #2 is dependent on performance of the overall economy, including all factors which influence the overall economy (and not just the aggregate performance, but how that performance is distributed relative to what government taxes.)
I think it's plain for most folks to understand that living beyond your means continually eventually means that debt payments comprise a large portion of your budget. No clairvoyance needed there. This is what the US government is doing right now. It's not hard to see that eventually the debt will be crushing.
What's much harder to do is predict exactly at what point this will occur. I would fully agree that the exact date of the debt service exceeding other large fixed payments is highly speculative. But that it will happen, absent structural changes, I don't find terribly contentious.
Deficits are nearly constant, surpluses are rare and minor. http://www.davemanuel.com/history-of-deficits-and-surpluses-...
Because the value of particular investments is a different thing than any of the things that they are dealing with, in much the same way that climate is different than weather.
> I think it's plain for most folks to understand that living beyond your means continually eventually means that debt payments comprise a large portion of your budget.
This isn't actually necessarily true. IF you continually live beyond your means (expenditures > revenue) then, assuming financing costs aren't continually decreasing, you will have debt service costs that, on average, increase over time.
If your revenue also increases over time, however, its quite possible to continually have expenditures exceed revenue without having debt service costs increase as a share of total expenditures.
> It's not hard to see that eventually the debt will be crushing. [...] What's much harder to do is predict exactly at what point this will occur.
That's the only thing that matters. Predicting what a trend would result in given an infinite time horizon is pointless "But this long run is a misleading guide to current affairs. In the long run we are all dead." [0]
> I would fully agree that the exact date of the debt service exceeding other large fixed payments is highly speculative.
Defense and nondefense discretionary spending may be large, but they aren't fixed.
> But that it will happen, absent structural changes, I don't find terribly contentious.
I'm not really interested in why you find it contentious, I interested in the basis for your position that the level of debt service at which that will occur is a (1) problematic in itself as a level of expenditures on debt services (dismissing the conclusion in the article that the expert consensus is that it is not), and therefore a matter of near term concern.
[0] John Maynard Keynes, A Tract on Monetary Reform (1923)
This is actually totally true. It's neigh tautological. If you're always adding debt then everything else equal, debt service costs go up. If you're adding debt while interest rates drop, debt service costs might go down. But in the end interest rates (at least for the majority of human existence minus a few short periods) have been positive, and not only positive but higher than they are right now.
Speculating that things will be OK because interest rates will stay low only makes sense if you're:
1. An idiot with no understanding of history and a complete lack of ability to do sensitivity analysis
2. Someone who has the ability to control the interest rate
In my mind we've got a whole bunch of folks in camp 1 and 2 at the moment. Thanks to them we've got high REAL unemployment and non-trivial REAL inflation. Before you say "but unemployment is 5.6%!" I would encourage you to understand the way the unemployment metric is calculated and to ask if you think that's the proper way to do it. http://www.gallup.com/opinion/chairman/181469/big-lie-unempl...
And before you suggest that the inflation numbers are legit, please do a thorough review of the methodology and explain to me how constantly changing the benchmarks doesn't constitute some kind of academic dishonesty if not outright fraud. Just because the government says something doesn't make it true.
For example, they tried that with the Kennedy Half Dollar and no matter how many they made people kept buying them because although the official value was $0.50 the actual value in terms of metal was much higher. http://en.wikipedia.org/wiki/Kennedy_half_dollar#Initial_pop...