National Debt: $12.4 Trillion and Counting

We have deficits and debts on the brain today. The federal deficit for the first four months of fiscal 2010 just clocked in at $430.7 billion. That’s 8.8% higher than the year-ago figure.

We remember that when the annual deficit hit a record high $430 billion under the second Bush administration, we thought the world was going to end and we’d have to “buy guns, ammo, dry goods, go into hiding, cling to God and wait for the country and the rest of world to collapse.”

The national debt now stands at $12.4 trillion. When we finished our final edit of I.O.U.S.A. back in August of 2008, we forecast it would reach $10 trillion and were called gloom and doomers for the effort.

The president’s solution? An executive order this morning establishing a National Commission on Fiscal Responsibility and Reform. This 18-member “debt commission” (10 Democrats, 8 Republicans) has two main tasks…

  • Cutting the deficit to 3% of GDP by 2015 (it’s currently running over 10%)
  • Fixing the problems with the Big 3 entitlement programs of Social Security, Medicare and Medicaid.

We applaud the goals, modest as they are. But we hold out little hope a blue-ribbon panel will actually solve anything. Looking back on the 9/11 Commission, it seems its major accomplishments were a best-selling book and a host of new security irritations at the airport.

No wonder the Harvard historian Niall Ferguson sees the crisis currently afflicting Greece and the other PIIGS nations eventually playing out in the United States. “The idiosyncrasies of the Eurozone should not distract us from the general nature of the fiscal crisis that is now afflicting most Western economies. Call it the fractal geometry of debt: The problem is essentially the same from Iceland to Ireland to Britain to the US. It just comes in widely differing sizes.

“What we in the Western world are about to learn is that there is no such thing as a Keynesian free lunch.”