Does the ending of ''QE2'' signify an end to U.S. economic and debt problems?
'The Congressional Budget Office's Long-Term Budget Outlook has new, alarming projections that should be a warning to all.
The ratio of debt to GDP has reached 69%, up from 62% last year. In 2010, the CBO's worst-case scenario said the debt-to-GDP ratio would rise to 87% by 2020. Now, with the economy failing to revive and the ongoing surge in stimulus spending, the total level of public debt will reach 101% of GDP by 2021.
Does it matter? You bet. Recent studies show that when public debt hits 90% of GDP, economic growth slows significantly -- by 1% a year or more. That means literally millions of lost jobs over the coming decade.
And things get much worse after 2021.
Under the CBO's so-called Alternative Scenario -- the one that CBO Director Doug Elmendorf believes is the most likely policy path Congress will take -- debt hits a stratospheric 187% of total U.S. output by 2035.
'An aging population and rapidly rising health care costs will sharply increase federal spending for health care programs and Social Security,' said Elmendorf.
The debt from all this, the CBO warns, could cost us as much as 18% of our total economic output over the next 25 years -- about $2.5 trillion a year, in current dollars. If that's the case, the U.S. would see the greatest relative decline ever in its standard of living in history.
How do we get out of this mess? Over the last 50 years, total federal spending has averaged 18.5% of GDP. Today, it's 24%. But by 2035, due to soaring entitlements, the government will spend one of every three dollars in our economy.
Unless we reform Medicare, Medicaid and Social Security, we will almost guarantee a lower standard of living for our children and grandchildren. Is that really what Americans want?''