More Debt=Lower Growth=Family Budget Cuts

Manmohan Kumar and Jaejoon Woo of the International Monetary Fund (IMF) confirm the previously published findings of Reinhart and Rogoff that sovereign debt and economic growth are inversely related. Specifically they estimate that a 10 percentage point increase in the debt-to-GDP ratio is associated with a slowdown in annual real per capita GDP growth of 0.2 percentage points per year. On average high-debt economies grew 1.3 percentage points slower than their low-debt counterparts. A difference of 1.3 percentage points of growth would cost the US more than $200 Billion per year -- or about $2000 per household per year.

The current administration would like you to believe that $2000 per year is nothing your household should be concerned about. Unlike when the government's revenue decelerates, you will be expected to actually cut your spending by $2000 every year . . .  and reelect those whose profligacy cost you that amount.