My Comment : $40Trillion national debt by 2025 !!!

Excerpts:
John Mauldin: I actually changed my “muddle through” metaphor here about a year ago. I think this decade we’ll be stumbling through instead of muddling because, as Milton Friedman said, the most permanent thing in the world is a temporary government program. We're going to run, this year, well over a trillion in off-budget deficit spending and trillions more in regular budget deficit. We're going to be $40 trillion in debt by 2025. That’s 180% debt to GDP. That looks like Japan and Europe.

John Mauldin: There are times when you actually need a central bank. And those were times when you needed a central banker. We needed them to help keep things going. Now they've dug themselves into a big hole and they're continuing to dig. They painted themselves in the corner, whatever analogy you want. If they allow, the US government is going to be at $40 trillion worth of debt within five years. A mere 1% interest rate is another $400 billion of interest. Or something equally ridiculous.

Now, here's what's the problem. We can’t allow rates to rise without completely blowing the budget. We're not going to see a deficit under $2 trillion [this decade].

John Mauldin: Well, yeah, because the entire premise goes back to Richard Cheney when he said deficits don't matter. He was technically correct, in the sense that if your deficit is below the nominal GDP growth, you're fine because you're shrinking the total debt to GDP. We've gone way past that and the Federal Reserve is going to have to buy more of that debt. It's Japanification and how long can this go on? When does it collapse? And the answer is we don't know. And the second answer is we really don't want to know. Because the only way we're going to know is when it's already happened. That's a very dangerous trek.

Now, the US dynamic is significantly different from Japan’s. It's significantly different from Europe’s. But nonetheless, that excess debt is going to slow our economic growth. I don't see any impetus from either political party to say we're going to lock in our spending and then try to grow our way to balance. There's just no limit there. You’ve pointed out that it looks like the next round of spending will be $3 trillion or more over 10 years. It's likely to get passed. I mean, that's just the reality. You're shaking your head…

John Mauldin: I have written about this, I'm sure you have too. There's just not enough [income] taxes that we can raise to make a dent. In this problem, the only way we get out of this is to have a crisis and to completely restructure the tax code to where it's a VAT, probably in the 18 to 20% range, get rid of Social Security and include it in the VAT, drop the income tax rate to a flat rate on higher incomes. And you use the VAT to be your safety valve. That's the only way we can get back to a balanced budget. But the only way we're going to be motivated to do that is if we have a crisis, if we become Japan.