Study Shows USA Has Long Term Debt Problems

I honestly started to chuckle when I saw this headline come up from USA Today.  Really?!?  They needed a STUDY to tell us that we are LONG TERM BROKE?!?!

New study warns of U.S. long-term debt problems

WASHINGTON — The government could run out of cash to pay its bills in full and on time sometime between the end of October and the middle of November if lawmakers fail to increase its $16.7 trillion borrowing cap, Congressional Budget Office Director Doug Elmendorf said on Tuesday.

Elmendorf told reporters that the Treasury Department's assessment that it'll run out of borrowing authority and have just $50 billion cash on hand in mid-October "sounds plausible."

The government has never defaulted on its obligations and Treasury Secretary Jacob Lew warned Tuesday that Congress needs to act to increase the debt limit by mid-October but he warned Republicans that President Barack Obama will never go along with their demand to derail implementation of the new health care law as part of a measure to fund the government or increase the debt limit.

"Efforts to either defund or delay the Affordable Care Act are unacceptable," Lew told the Economic Club of Washington. "That is not a path towards something that can ultimately be signed into law."

Tuesday's Congressional Budget Office report says that government spending on health care and Social Security would double relative to the size of the economy in 25 years and that spending on other programs like defense, transportation and education would decline to its smallest level by the same measure since the Great Depression.

The share of federal spending devoted to health care would rise from 4.6% of gross domestic product today to 8% in 2038; spending on Social Security would rise as well, as the number of people receiving benefits rises to more than 100 million in 25 years, compared with 57 million people taking benefits now.

The rise in costs for the popular benefits programs has been apparent for many years and budget hawks says it's best to tackle their unsustainable growth immediately rather than be forced to make more draconian cuts later. But Washington — whether government is divided or controlled by one party — has been unable to agree on ways to curb the growth of these programs.

The report comes as a divided Congress and Obama need to deal with two important problems: keeping the government funded beyond the Oct. 1 start of the 2014 budget year and permitting the government to borrow more money to pay those bills. Republicans hope to use the must-pass stopgap spending and debt limit legislation to derail "Obamacare" and force further spending curbs.

Rep. Paul Ryan, R-Wis., chairman of the House Budget Committee, said: "In the weeks ahead, I hope we work together to heed CBO's warning. We must provide relief to the families we serve. We should start by delaying Obamacare and paying down the debt to help grow the economy."

Here;  http://www.usatoday.com/story/money/business/2013/09/17/debt-study/2826499/

OK...let me summarize that all for you....the USA has a credit card balance that they can't pay back and that they keep adding to because they have no other way to raise income.  The credit card is maxed out...it's at its limit.  Obama passed Obamacare and it is going to require lots more money to get it up and running...money he wants to put on the credit card.  The Republicans hate Obamacare for a variety of reasons and have threatened to DE FUND it OR they will NOT raise the credit card limit...thereby possibly pushing the USA closer to default. (default is when you don't pay principal and/or interest on your credit card)

Wow!  What a pickle!!  We want things TODAY that we can't afford...so we borrow the money in hopes that SOMEONE ELSE IN THE FUTURE will be able to pay it back!!  Love it!!

"Hey Mr. Chevy dealer...I would like one of those 2014 Corvette convertibles...the red one with the Super H/O engine and the custom wheels!  How much?  Ok...$94,000...that sounds pretty good.  What's my down payment?  Nothing!!  Well what is my monthly payment?  $50 per month for 30 years and then a balloon payment of $3 million??  I'll take it!!  Who cares what happens in 30 years....that's so far away, I'll be way better off by then...and I get to drive this awesome car TODAY for only $50 a month!!!  The babes will love me...and even my wife will think I'm pretty cool!!"

Fast forward 30 years....the Corvette has long been in the junk heap and now you need a new car....but you have a nagging problem of the $3 million balloon payment....Crap!!....you just NEVER thought that day would come....30 years seemed like so far away in the future!!....and you had houses to buy, kids to put through school, vacations to Cancun, ski weekends, cabins and boats to keep the family entertained....you just never got around to saving for that $3 million balloon payment....and now the banker is going to call next month....what are you going to do??

Of course the scary thing about the U.S. debt problem is that Russia and China may be the bankers who come calling....