Beware the light at the end of the tunnel…Its A Train
Commentary: It’s a debt train about to collide with federal obligations
David Stockman served in the House of Representatives and was President Reagan’s budget director. He was a founding partner at The Blackstone Group and now runs Heartland Industrial Partners, a private-equity fund. This article first appeared on Minyanville.com
By David Stockman
GREENWICH, Conn. (MarketWatch) — The federal deficit is no longer an abstract long-term problem; it’s a financially critical freight train hurtling down the track at alarming speed.
Here’s a dramatic way to look at it: Nominal GDP is only $100 billion higher than it was back in the third quarter of 2008. That means it has been growing at only $4 billion per month, while new federal debt has been accumulating at around $100 billion per month.
Yes, this period represents the worst of the so-called Great Recession, but never in history has the federal debt grown at a rate of 25 times GDP for two years running! See “The Road to Recovery: Are We There Yet?”