Where Did All the Money Go?|
1997 June 16|
For some years now, the annual budget deficit has roughly equaled interest on the national debt. In other words, if there were no debt, there would be no annual deficit. At least this would be true if the official figures gave an accurate picture, which they do not. Public accounting is done more honestly in Europe than in the US. The EU nations are required to count such things as unfunded social security obligations as debt. The US does not. When the baby boomers start retiring, this circumstance will become painfully apparent.
At the end of WW II, the national debt was the highest in US history. It was more than one year's GNP. For 15 years after the war, austerity ruled. Real GNP grew very rapidly, inflation was moderate, and interest rates remained low. This combination of circumstances reduced the national debt to a small fraction of a year's GNP by the mid-60s. Since then it has grown steadily.
Unless the US can get its budget into some semblance of balance, the long-term economic future is not promising. What can be done? We will examine a number of measures that together could turn the tide.