Barron’s goes there. (Economics editor Gene Epstein is not President Obama’s biggest fan.) Here’s the lede from the latest cover story:
In his State of the Union speech last Tuesday, President Obama concluded that “the State of our Union is stronger.” The big question is: stronger than what?
Federal debt is a record $12.2 trillion, or 76% of the nation’s annual output of goods and services. While that’s still well below Greece’s 153%, we’re headed steadily in the wrong direction.
According to estimates by the Congressional Budget Office, adjusted by Barron’s to account for recent tax increases and other factors, if the U.S. doesn’t raise taxes further and cut spending dramatically, the national debt could easily reach 153% of economic output by 2035.
These are not just numbers. If the U.S. national debt continues ballooning, we can be sure of a deep, long-lasting recession — very likely a depression — sometime in the next two to three decades. The unemployment rate could easily surge to 20%.
In the article, Epstein runs through a common argument – that hiking taxes alone won’t put the U.S. on a sustainable fiscal trajectory. Thus, he thinks politicians should embrace the upcoming sequester of spending cuts set to take effect March 1.
(h/t Sara Eisen)