Budget Deficit: The U.S. Would Not Qualify for EU Membership by Gregory Hilton

At the beginning of 2008 no one would have imagined the French Senate would soon be lecturing us about the need for fiscal responsibility. Unfortunately, they do have a point. Our budget deficit is now worse than Cuba’s. Because of our spending programs we would not be eligible for membership in the European Union. The European Union’s Stability and Growth Pact adopted in 1997 requires a budget deficit to be less than three percent, and requires a national debt beneath 60 percent of Gross Domestic Product (GDP).
The necessary U.S. reductions are massive. According to the Congressional Budget Office, the 2010-19 deficits would total $9.3 trillion; the debt-to-GDP ratio in 2019 would be 82 percent. This is a ratio of publicly held federal debt to gross domestic product (GDP, or the economy). This is highest since 1950 (80 percent) when we were recovering from WW II.
Treasury Secretary Geithner and NEC Chairman Larry Summers are refusing to rule out a tax increase, and in a complete reversal from last year, Obama supporters are now saying this is necessary. Economic recovery has returned to Wall Street, but not to Main Street. As soon as it does, senior officials of the Federal Reserve are telling us interest rates will be raised in order to avoid inflation.
The U.S. banking system has increased surplus reserves from $1.8 billion in 8/08 to $832 billion in 8/09. Private sector liquidity is vapid, and a tax increase could wallop our nation into a disaster.

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