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There are three ways the debt problem will be solved in America.
The first is wishful thinking and not a solid plan: Keep spending and hope the economy has a 1990s-like boom where tax receipts will overcome the excessive spending.
The second is allow fiscal hawks like Paul Ryan to propose sensible changes and reforms before more extreme austerity measures are required. This is preferable.
The third is quite scary. If we don't pay up, we'll face a Greece-like debt crisis. And this isn't new, the White House deficit commission said this 2 years ago. The demand for US debt is not bottomless and China's recent troubles show that we're on precarious footing. From TIME:
Lawrence Goodman opined in the Wall Street Journal last week that, “Demand for U.S. Debt Is Not Limitless.” In the piece, Goodman takes aim at those who have argued that demand for U.S. debt is strong, and that regardless of what the rating agencies say, the marketplace believes the U.S. will pay its bills. In particular, he highlights the “stunning” fact that in 2011 the Fed purchased 61% of the debt issued by the Treasury, up from negligible amounts prior to the 2008 financial crisis. This, he added, “not only creates the false appearance of limitless demand for U.S. debt but also blunts any sense of urgency to reduce supersized budget deficits.”
In other words: We're loaning money to ourselves which creates the impression that there's nothing wrong. Imagine it like this: You issues a credit card to yourself and keep buying big ticket items based on the promise that you'll pay it back. But since you have no creditors knocking down your door, you aren't worried about being responsible.
We need to get this in control before the actual creditors come calling. Because we don't have the capital to pay those notes.
Every man, woman and child in this nation owes $30,000. If we stripped all the wealth from the richest people in the nation and all the money from the evil corporations, we'd still come up short.
The way to fix this isn't to turn a blind eye and "hope" for "change." The Obama way just isn't working.