New York Times: U.S. Racing Toward Debt ‘Shock’

Monday, November 23, 2009 1:51 PM

A page one, top-of-the-fold New York Times report Monday warns that U.S. debt is rising so fast that the federal government is careening toward a “payment shock” in the not-too-distant future.

The Times lead headline read: “Federal Government Faces Balloon in Debt Payments: At $700 Billion a Year, Cost Will Top Budgets for 2 Wars, Education, Energy.”

The Times headline appears eerie just as the Senate moves to push forward on a radical healthcare reform — with CBO estimates for a final bill costing nearly $1 trillion dollars over the next year.

The national debt now stands at over $12 trillion and the White House estimates that the cost of servicing the debt will rise to more than $700 billion a year in 2019, up from $202 billion this year. The Times suggests that $700 billion annual payment cost may be conservative.

The additional $500 billion a year in interest payments would surpass the combined budgets this year for education, energy, homeland security, plus the wars in Iraq and Afghanistan, the Times observes.

Treasury officials face not only huge new debts incurred in response to the economic meltdown but a balloon of short-term borrowings coming due in the months ahead, and interest rates that are certain to return to normal levels when the Federal Reserve concludes that the fiscal emergency has passed.

“Even as Treasury officials are racing to lock in today’s low rates by exchanging short-term borrowings for long-term bonds, the government faces a payment shock similar to those that sent legions of overstretched homeowners into default on their mortgages,” The Times reported on Monday.

Jobless rate bolts to high not seen since Clinton Administration – Unemployment 14 year high of 6.5 percent


Jobless rate bolts to 14-year high of 6.5 percent

By JEANNINE AVERSA, AP Economics Writer

WASHINGTON – The nation’s unemployment rate bolted to a 14-year high of 6.5 percent in October as another 240,000 jobs were cut, far worse than economists expected and stark proof the economy is deteriorating at an alarmingly rapid pace.

The new snapshot, released Friday by the Labor Department, showed the crucial jobs market quickly eroding. The jobless rate zoomed to 6.5 percent in October from 6.1 percent in September.

Let me see, 14 years ago. That would be 1994. The middle of Clinton’s first term. A Democratic Congress then and a Democratic Congress now – getting more liberal by the minute.

I thought the Clinton days were the days of “Milk & Honey” – things don’t get better than that.

Well, that is true compared with the Carter Administration days – where we seem to be headed.

The current (2008) “Prime Interest Rate”  – 4%       

Under Jimmy Carter Interest rates topped out at 21.5% in Decemeber 1980, 5 times higher than today.

2008 Unemployment Rate: (4.9% January 2008 – 6.5 % October 2008) 2008 Average – 5.52%

Under Jimmy Carter unemployment topped out at a whopping, double digit  – 11.3% – in some states. Twice as high as the 2008 National Average.

The 2008 average inflation rate 4.3%.

Under Jimmy Carter – 14% inflation.

One last comparison, “The media discovered and promoted Carter. As Lawrence Shoup noted in his 1980 book The Carter Presidency and Beyond:

“What Carter had that his opponents did not was the acceptance and support of elite sectors of the mass communications media. It was their favorable coverage of Carter and his campaign that gave him an edge, propelling him rocket-like to the top of the opinion polls. This helped Carter win key primary election victories, enabling him to rise from an obscure public figure to President-elect in the short space of 9 months.”

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