According to a Federal Reserve official, we are:
“If we continue down on the path on which the fiscal authorities put us, we will become insolvent, the question is when,” Dallas Federal Reserve Bank President Richard Fisher said in a question and answer session after delivering a speech at the University of Frankfurt. “The short-term negotiations are very important, I look at this as a tipping point.”
A big part of the blame is on Congress. Both parties had a hand in it, but the Pelosi Democrats and the Obama Administration have made things much, much worse than anyone before them including Bush as the chart shows.
And a large part of this problem has also been the Federal Reserves policies. But a driving force has been the unfunded liabilities that stem from entitlements. All the major countries in the world are learning the hard way that governments cannot provide for a welfare state. As this lengthy article in the National Journal puts it:
All over the developed world, nations are coming to terms with the fact that the social-democratic welfare state is turning out to be untenable. The reason is partly institutional: The administrative state is dismally inefficient and unresponsive, and therefore ill-suited to our age of endless choice and variety. The reason is also partly cultural and moral: The attempt to rescue the citizen from the burdens of responsibility has undermined the family, self-reliance, and self-government. But, in practice, it is above all fiscal: The welfare state has turned out to be unaffordable, dependent as it is upon dubious economics and the demographic model of a bygone era. Sustaining existing programs of social insurance, let alone continuing to build new ones on the social-democratic model, has become increasingly difficult in recent years, and projections for the coming decades paint an impossibly grim and baleful picture. There is simply no way that Europe, Japan, or America can actually go where the economists’ long-term charts now point — to debts that utterly overwhelm their productive capacities, governments that do almost nothing but support the elderly, and economies with no room for dynamism, for growth, or for youth. Some change must come, and so it will.
Bureaucracies cannot run things reasonably well. Especially over long terms. The longer a bureaucracy exists, the larger and more corrupt it gets. It is an inevitable reality which is why there should be an amendment to the constitution that limits the size of government to a small percent of the GDP. That would force them to live within their means, but give them an incentive to help the GDP grow instead of allow them to harm it as they are now.
We cannot continue the way we’re going. Look at the chart in that article to see what that actually means.