Why Budgets Matter: Debt Load is "Unsustainable"

The current impasse over U.S. federal government spending really is not the big issue. Debt and structural obligations constitute the sword of Damocles hanging over the federal and most state governments. It's math, not politics. 

The U.S Congressional Budget Office simply says federal debt held by the public would reach 100 percent of gross domestic product in 2038, while clearly harming economic growth as well.

That debt load "could not be sustained indefinitely." A broken economy and a bankrupt United States that would find it had to break many "promises" is the real problem. Either the country will learn to live within its means, or it will be forced to do so, by debt burdens growing faster than gross domestic product, and hence ability to "tax our way out of the problem."

"Increased borrowing by the federal government would eventually reduce private investment in productive capital," CBO warns. 

States have the same underlying problem. Spending driven increasingly by obligations already incurred will outstrip tax revenue to support current obligations. 

In simple terms, at some mathmatically inevitable point, virtually 100 percent of local property taxes used to support public education will be consumed by retiree retiree obligations. The problem has been known for more than a decade. 

Already, in Michigan, 66 percent of all education funding goes not to teaching children but to paying retiree benefits and health care costs. That's a structural problem. 

Total Spending and Revenues Under CBO's Extended Baseline
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