The last post brought in some questions about how the interest on the debt will compare to GDP over the decade - so this chart slows interest as a percentage of GDP. I included my projections versus CBO’s - I think their assumptions are far too optimistic for growth rate of the economy and interest rates. My projection assumes a 3.3% growth rate over the decade, and higher interest rates starting in two years. It may not look like a big difference - but my model has us paying an extra $127 billion in interest payments in 2021. And it is very likely my model is too optimistic, also. Rates and growth could easily be worse than my assumptions. We are facing a situation where our expenditures are way out of line with what we can afford and historical norms.
This chart shows Projected Net Interest Expenses from the President’s 2012 budget, as forecast by the Congressional Budget Office. Yes, those are Billions - and the chart helps explain why so many are nervous about the level of spending of the federal government. The reality is likely worse than this, since the CBO forecasts GDP growth of at least 4.4 percent in every year of the decade. Not likely to happen - and slower growth will mean higher deficits. At some point, our creditors will rebel. I will just note the CBO quietly released this on Friday - with everything else going on in the world, this bombshell hasn’t gotten much notice.
Sometimes living in the country is a lot of extra work: power outages, water leaks, downed trees, fencing repairs, invasive weeds, etc., etc. But man, sometimes it is so beautiful and peaceful - you just know it is all worth it!
This post is for Rita - thanks for getting me back in the habit!
A Loss for Words
Tonight I learned of the suicide of the son of some hometown friends. I am just crushed for them, and feeling the complete inadequacy of any words to comfort them in this most difficult time. May God grant them grace and bring them comfort in the days to come. There are many hard things in life, but none any harder than this.
Just in case this wasn’t already on your mind before you vote - here is the Congressional Budget Office’s projection of the growth of the Federal government (as a percentage of GDP) over the coming decade. I guess you already know where that money is coming from, right?
Happy Election Day!
A better shot of our newest anti-gopher tool
Our newest resident - a gopher snake - has set up residence in a gopher hole in front of the house. A moment of silence for the former resident. We love gopher snakes! Sorry I couldn’t get a better shot - s/he is camera shy.
Like most states with big budget problems, California has been ratcheting up its per-capita spending for a long time. Through good times and bad, you could count on the state’s representatives to pour out ever-increasing amounts of the peoples’ money. So, before the primary election coming up, it might be worth a few moments to contemplate this eloquent chart. It might even suggest the party is over.
The per-capita spending data for this chart is from the California Department of Finance. The deflator used to generate the constant-dollar numbers is a US deflator index taken from the 2010 President’s Economic Report.
Are we about to see another weather shift?
Some good evidence in this article we are going to bounce from El Nino back to La Nina conditions. We have had a relatively wet winter in California this year - will this take us back to the drought conditions we saw for the three prior years?
Denial
A great little article about our current financial situation, and the power of denial. What is it about humans that causes us to keep going down a path we know will lead to crisis?
