This is the best article I’ve read about the debt crisis and entitlements and interest rates in a long time. Should be required reading for entrance to the polling places! It backs Romney…but only at the very end. The real meat is in the prior discussion. Worth your time.
The Economic Case for Romney-Ryan | RealClearPolitics
"… the basic structural problem that is driving us toward an economic “death spiral” of unsustainable borrowing. In this fifth year of the “Great Recession,” it may not feel like things can get any worse, but they can. A lot worse.
Mitt Romney occasionally talks about how we’re headed to where Greece is right now. It’s a thoroughly valid comparison, but I suspect it doesn’t have the punch that it should because most people don’t really understand what is happening in Greece, so they don’t understand the parallels to what is happening in the United States.
With its debt hidden and the implicit backing of stronger economies, particularly Germany, Greece was able to borrow money at low interest rates and proceeded to do so. But then came the global recession and the revelation of the country’s hidden debt, and the country’s borrowing costs suddenly spiked.
The impact of the increased interest rates was shattering. The sudden increase in interest payments, coupled with reduced revenue due to the recession, put the country in a serious bind. To make its interest payments, the government had to raise taxes or cut spending, or both. But that depressed the economy, reducing revenues even farther. This made lenders even more nervous and caused rates to go even higher. We saw this same pattern recently in Spain, which imposed “austerity” only to have its spending cuts eaten up by higher interest rates. That gives you an idea of how hard it is for a country to get itself out of a debt crisis.
…That is what the Eurocrisis is about, and under Obama, America is setting itself up for exactly the same kind of death spiral.
… But even if we start to panic about the looming debt crisis, we can’t just suddenly stop borrowing, because of the massive commitments we have made to the entitlement state. Currently, the federal government is taking in between $2 trillion and $2.5 trillion in tax revenues-and paying about the same amount out again in Social Security, Medicare, Medicaid, and unemployment insurance. We are then forced to borrow upward of a trillion dollars to pay for everything else, including basic functions of government like national defense."
Much more good stuff at the link.