Here’s an ugly dose of perspective. America is so dependent on foreign financing for its budget, that things like defence, homeland security, education, and unemployment benefits are pretty much funded by foreign nations such as China.Why?
According to former Republican senator and committee co-chairman Alan Simpson, federal revenue is, already, completely chewed up by the three nasties: Social Security, Medicare, and Medicaid. “The rest of the federal government, including fighting two wars, homeland security, education, art, culture, you name it, veterans — the whole rest of the discretionary budget is being financed by China and other countries.”
Foreigner creditors truly hold America by the neck these days. They effectively finance everything beyond the three programs above.
Worse yet, even strong GDP growth wouldn’t be enough to save the U.S. from its debt proglem. Committee co-chairman and former Clinton chief of staff Erskine Bowles estimates, “We can’t grow our way out of this. We could have decades of double-digit growth and not grow our way out of this enormous debt problem. We can’t tax our way out. . . . The reality is we’ve got to do exactly what you all do every day as governors. We’ve got to cut spending or increase revenues or do some combination of that.”
The other reality is that we won’t get double digit GDP growth. So the cuts will need to be deep.