Although United States President Barack Obama and the Republican leadership settled on a fiscal cliff deal, the American people are still not confident in the federal government and its abilities to handle economic matters that could harm their personal financial situation.
According to a new Ipsos-Reid/Reuters online poll released Tuesday, last week’s agreement in Washington that canceled across-the-board tax increases and automatic spending cuts did not help Americans’ attitudes toward the direction of the nation’s economy. Even though the respondents gave credit to the president and the Democrats for completing a deal (11 percent credited the GOP), they’re still cautious over future showdowns between the Republicans and Democrats over taxes and spending.
More than two-thirds are worried that their taxes could rise or their benefits could shrink, while 81 percent said they’re concerned that the economy could suffer another downturn in the near future.
When it comes to paying the bills, 75 percent noted they fear the Congress would not be able to avoid cuts to defense and domestic spending, which were delayed for two months as part of the fiscal cliff arrangement.
As the U.S. reached its debt limit and the Treasury implemented measures to give the federal government some time to strike a debt ceiling deal, close to three in four Americans say they believe the country could default on its debt, which has already exceeded $16.4 trillion. The likely scenario is that Congress will raise the debt ceiling by early March to avert a first-ever default.
The U.S. has already breached the debt ceiling by more than $21 billion.
“If you had to score it, the Democrats and especially Obama, came out better, but there’s a lot of uncertainty. There’s no clear winner from this,” said Ipsos-Reid pollster Clifford Young. “It’s very clear people are still uncertain. They’re worried that until there’s a final deal, are we going to go through this again?”
Since the 2007/2008 financial crash, the U.S. economy and its public finances have not improved, according to the federal government and the Federal Reserve’s own published data.
The unemployment rate remains stagnant at 7.8 percent (many economists say the real figure is in the low-20s), the federal government has released four straight trillion-dollar-plus budget deficits, there are more people on food stamps than ever before and a new report from the Heritage Foundation based on Census Bureau Current Population Survey (CPS) data suggests 128 million people depend on government programs.
All of this will lead to a behemoth tidal wave, according to those who have sounded the debt alarm, which will eventually sweep across the country. For years now, some have pointed out the unfunded liabilities and expenditures monster in the U.S. that could unfold in the next decade or two. At the present time, the projected figure is $122.2 trillion, including unfunded Social Security ($16.1 trillion), Medicare and Medicare Part D ($84.7 trillion).
The Congressional Budget Office (CBO) reports that the national debt is expected to hit $20.3 trillion by the end of 2016. Many project that unless the U.S. makes serious cuts – not just cuts to future spending increases – then the U.S. could sustain itself. However, former Comptroller General David M. Walker states on his Comeback America Initiative tour that the U.S. will eventually only be able to afford the interest on the national debt and some entitlement benefits.
Not only is the Federal Reserve inducing tremendous inflation, it is also holding down rates. This could lead to a spike in interest rates in the future, though Fed Chairman Ben Bernanke has rejected such notions.
There are some in Congress and the Senate that have openly denounced the national debt, including retired Texas Republican Congressman Ron Paul, who openly admitted on Fox News that the U.S. will never pay down the debt.
Meanwhile, some Tea Party senators, like Kentucky Republican Senator Rand Paul and Utah Republican Senator Mike Lee, have called for a balanced budget amendment to the U.S. Constitution. There is a lot more opposition than supporters of an arrangement.
“I would vote against raising the national debt ceiling. Again, this is about mortgaging the future of unborn generations of Americans,” said Senator Lee. “It’s a form of taxation without representation. I don’t think we can do that.”
It was recently reported that there has been some talk of minting a $1 trillion platinum coin to pay down some of the debt.
Private household debt has also become a concern to public and private officials. Total personal debt (mortgage and consumer) is more than $15.7 trillion with student loan debt surpassing the $1 trillion mark and credit card debt being less than $900 billion.
According to USDebtClock.org, a website that publishes financial data using Federal Reserve information, total U.S. debt (household, state, business, federal government and financial institutions) is approximately $58 trillion.