Monday May 23, 2016
The US is heading straight for a fiscal calamity in the next decade. Even if you believe the CBO’s Rosy Scenario projections — which assume that we will go 207 months thru 2026 without a recession or double the longest expansion on record and nearly four times the normal cycle length — we will still end up with $28 trillion of national debt and a $1.3 trillion annual deficit (5 percent of GDP) by 2026.
But that’s the optimistic case! As I demonstrated recently, if you get real about all the enormous headwinds down the road — including the virtual certainty that the Red Ponzi will have a crashing landing and take the global economy down with it — you end up with a truly dismal picture.
To wit, just assume economic performance during the next ten years is no better or worse than the average of the last ten years, including the last decade’s 2.5 percent growth rate of wage and salary income.