Beginnings of a Crisis...

 

• Current Washington impasse magnifies ability to respond to issues and budget quarrels have hindered meaningful progress on debt - Advocacy Based System.
  
   

• Unchecked Growth in Mandatory Spending. The largest drivers of debt are Mandatory Spending items which account for 2/3 of Federal Spending and are increasing despite decreased revenues. Costs are also not reviewed on an annual basis by policy and are a political hot potato. Changes also require Congressional vote.
   

• Long term deficits increase the amount it costs to borrow as interest accrues on top of the principal balance. CBO estimates that interest will increase from the current level of 6% to double digits if deficits are sustained.uA downgrade in credit rating affects the % return demanded by investors (similar to a credit card) Japan’s credit rating downgraded in 2013.Failed Debt Controls.
   

• Previous attempts by Congress to control the debt have been largely unsuccessful (debt ceiling raises 12x since 2000, 100x total).
   

• Federal spending has outrun federal revenues for the last 10 fiscal years.