The really awful news is in here. Interest payments rise, according to OMB projections, from about $180 billion to over $800 billion in 2020.
The budget is about $3.7 trillion. Of that we take in about $2 trillion in taxes. The rest is being borrowed at present. There's no way we can possibly put more than 20% of federal revenue toward interest, and this presumes a 3% interest rate on that debt, which is insanely optimistic after we manage to pile on another double. If we get a "Greece" style response and rates shoot upward, well, you can forget about it.
We won't get there folks. It's not possible. The market won't allow it and The Fed can't control it.
There's plenty of arm-waving in the presentation that is all an attempt to claim that "we can make this work."
No, we can't.
The budget deficit has to be brought negative, and this means a cut in federal spending by 50%.
Which, incidentally, only takes spending back to 2000 levels.
We don't have a choice folks, and we have to do it now.
We must get rid of fully half of all federal spending and we must run a primary budget surplus including all off-balance sheet items such as Social Security and Medicare.
I know nobody wants to hear it, but that doesn't matter. It has to happen. If it doesn't, and there's no evidence that it will, then at some time well before the 2020 line is reached the market will come to the conclusion that we will not fix the problems.
On the day that happens yields will ratchet and the spiral - the last one - will begin.