These show some excellent work being done in short animation. And a wide range of subject matter and viewpoints.
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The debt load of the US is troubling many economists. The overall reason is very simple. It is no more complex than your own home finances. The government is spending much more than they make.
Officially, the US holds about $13 trillion in public debts (bonds and interest they owe to big mutual funds and foreign governments, plus the debt to the Social Security trust fund). They owe $8 trillion in Treasury bonds and $5 trillion to the trust fund. (more than a little scary that the “trust” fund is actually a debt fund). This is growing at a record pace. So much so that the unthinkable is being thought – there will not be enough buyers for US debt (Treasury Bonds) as early as 2010.
Now for some perspective and some hidden pitfalls.
- Fannie and Freddie – the government owns these two but their debt does not show up in the numbers – on average, the government and analysts say this number will be $400 billion by 2020.
- Trust Fund – this has never been addressed until now – payments will begin to this fund in the midst of the economic downturn, so even more pressure will be placed on the smaller government revenues
- Unfunded promises – within 20 years or less, huge injections of money will be necessary to fund Social Security – this number alone dwarfs the other government liabilities ($107 trillion)
- Tax breaks – these decrease the revenue of the government, cause more debt accrual and are often called hidden government spending programs
- Now versus the Great Depression – during those dark economic days, there were now social programs like we have today – now, however, on top of all of the debt, the US has these huge social programs to maintain, adding to the problem budget
Medium to Long Range – The Real Problem.
The next ten years has now become a problem; even if the current Obama projections hold true, with 5.5% annual deficits (high even in an economic boom), by 2019, our debt to GDP ratio will be 82% (higher than any time since WWII).
The problems get worse after 2019, as the unfunded liabilities come due. The real trick is how the folks in Washington are going to be able to spend now to help the economy get back on it’s feet, and at the right time make the switch to fiscal responsibility to get these debts under control. During the Great Depression, they cut that switch in 1937, leading to the second great downturn in the economy.
The real result of all of this, is back to the simple idea of home finances. The US government and consumer has been living beyond their means for 40 years. The credit cards are all maxed out and they won’t give us any more cards. So it’s time to pay them back. Which means that we have less disposable income for the foreseeable future.
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