These days, you can’t swing a dead loan modification deal without hitting an economist worried about our national debt.
Here is a good example. Monday, the White House came out with a proposed $3.8 trillion budget for 2011. From the White House’s own numbers, the budget would expand spending by $1.7 trillion from 2010 to 2019. There are some interesting statistical ramifications from the budget proposal, which still has to pass both houses of Congress before it becomes reality.
Based on the White House’s own proposed budget, as calculated by the Washington, D.C.-based Heritage Foundation...
- Our national debt would be 49% higher in 2010 than it was in 2009.
- By 2020, 20% of all federal taxes would go to just paying the interest on the national debt.
- Spending restraint is out. By 2020, about 90% of the growth in the national budget deficit comes from spending hikes — and only 10% comes from spending cuts.
- In 2007, the federal government spent, on average, $24,000 per U.S. household. By 2020, that goes up to $36,000.
If the U.S. actually spends this much money, how would that impact U.S. citizens? It’s a fair question. As Lawrence H. Summers — President Obama’s own economic adviser — has said, “How long can the world’s biggest borrower remain the world’s biggest power?”
It’s a question just as easily asked about banks. With the nation increasingly mired in debt, both individually and collectively, can bank consumers at least get some decent yields on certificates of deposit?
Not as long as there is so much uncertainty over the direction of the U.S. economy, and the proposed White House budget is only going to add to that uncertainty (if not trigger outright anxiety among creditors and lenders).