Federal deficit spending in 2013 actually went down to $800 billion. But how does Federal deficit spending affect you?
As previously reported by The Inquisitr, the Federal ceiling crisis of 2013 will face a $16.9 trillion debt.
Current US Federal spending levels have exceeded $3.5 trillion and the US Federal budget deficit is a little under $800 billion, down from the $1.3 trillion peak. The US Federal tax revenue is almost $2.75 trillion and growing, but Democrats want to add an additional $1 trillion in taxes. This would mean the income would exceed Federal spending, but tax increases also tend to slow the economy.
Despite Federal spending cuts via the automatic sequester, Federal deficits in 2013 only dropped because of increased taxes and a growing US GDP. Some people in Congress are already talking about getting rid of the 10-year plan for the sequester, which would only add over $100 billion to the Federal deficit every year.
At $16.9 trillion, the Federal debt means every United States taxpayer owes $148,000. The Federal debt interest payments alone exceed $2.8 trillion. President Obama’s plans would reach $20 trillion in Federal debt by 2020, but actual Federal spending levels have that scenario coming sooner.
Out of the more than 316 million Americans, only 144 million are in the work force, with the rest either unemployed, retired, disabled, or living in poverty. We have one Federal worker for about every 33 American workers.
Federal Debt Crisis: How Federal Deficit Spending Affects You
Social Security disability benefits are running out of money by 2016. Social Security disability claims rose rapidly and 14.5 million Americans are receiving benefits. Last year, the Social Security administration paid out over $773 billion in benefits after receiving only $725 billion, leaving a deficit of nearly $48 billion.
Student loan debt has crossed the $1.2 trillion mark, with Federal student loan debt accounting for over $1 trillion of that amount. This means student debt alone accounts for over six percent of the $16.9 trillion federal debt. If a large enough percentage of students default on their student loans this could have catastrophic effects on the economy. This is similar to how the housing bubble bursting caused the Great Recession, but that financial crisis only involved $900 billion.
In the long run, current Federal deficit spending could bring the national debt over $20 trillion within 3.5 years. The Congressional Budget Office projects Social Security to cost over one trillion in 2018, which is over one-third of the entire budget. Assuming an average five percent Federal interest rate, Federal interest payments on the national debt will quickly be reaching unsustainable levels and would exceed $1 trillion.
Such a scenario makes a Federal debt default more likely, which would mean the United States credit rating would drop. The value of the US dollar would also likely be hurt, with the potential for hyperflation causing the cost of everything to double within months or even weeks or days. This final fiscal super cliff would leave a dysfunctional government unable to provide many of its basic functions that US citizens have come to rely upon.
How do you think Federal deficit spending should be reduced and the Federal debt paid off?