The US economy may find itself in dire straits, unless measures are taken as soon as possible, the US Office of Government Accountability (GAO) warned the US Congress on June 21, 2018.
"According to the 2017 Financial Report, the federal deficit in fiscal year 2017 increased to $666 billion-up from $587 billion in fiscal year 2016 and $439 billion in fiscal year 2015. Federal receipts increased by $48 billion, but that was outweighed by a $127 billion increase in spending, driven by Social Security, Medicare, and Medicaid, and interest on debt held by the public (net interest)," the congressional watchdog noted, stressing that "the longer action is delayed, the greater and more drastic the changes will have to be."
Speaking to Fox News, in mid-June US Congressmen Andy Biggs shifted the focus on yet another problem — the country's steadily increasing national debt that may lead to a "debt bomb explosion."
"I think we're headed over the edge," he said. "Think of it as a waterfall, we're in the boat, and now we're almost at the point where we can't get out of the flow. We're heading over unless we do something immediately."
On March 15, 2018, the US national debt exceeded $21 trillion for the first time in history.
"If you don't start doing it now, then in ten years you'll have no choice. You can inflate your currency, you can default on your debt, you can try to raise your taxes and kill your economy — these are the choices that we'll be looking at in about eight to ten years," Biggs said, emphasizing that short-term pain is the least evil to fix the problem.
Previously, on June 5, Howard Schultz, Starbucks' former executive chairman emphasized the national debt as the country's biggest domestic threat, while speaking to CNBC: "I think the greatest threat domestically to the country is this $21 trillion debt hanging over the cloud of America and future generations."
For their part, CBO and GAO warn that the debt-to-GDP ratio may skyrocket to 106 percent within 14 to 22 years. However, the International Monetary Fund's prognosis is more pessimistic: The international financial organization foresees the US debt-to-GDP ratio amounting to 116.9 percent by 2023.
One of the probable causes of looming economic hardships is the country's overblown military budget. The budget deficit leaped up following the attacks of September 11, 2001, when Washington declared war on terrorism. From 2003 to 2011, the deficit doubled: from $437.4 billion to $855.1 billion. Simultaneously defense spending increased by 50 percent, according to the National Priorities Project (NPP), an American non-governmental organization. The US has colossal military expenditures exceeding $600 billion a year. Given the Trump administration's defense budget proposals, these expenditures will unlikely shrink in the near future.
In an unexpected twist of fate, the Trump administration's recent tax reform could boost the budget deficit even further, according to CBO's April report. Due to the reform the deficit may be about $1.85 trillion higher over the next 10 years then was previously predicted.
On June 24, The Chicago Tribune published a letter by one of its readers, eloquently titled: "Is anyone in Washington worried about the national debt?"
"Federal deficits have been prevalent for many years now, but our current debt is staggering and almost unfathomable," Michael Imhof from Aurora wrote. "Spending needs to be pulled in because America is on a train speeding toward national ruin. Pray for America to slow this train."
