Debt load weighs heavier on households these days—and the U.S. government is no different. At the Ag Issues Forum sponsored by Bayer CropScience, policy expert Jim Wiesemeyer covered the waterfront of Washington issues, but he really drilled into what he calls the “debt sentence” for the U.S.
“The numbers are starting to add up to a size where they can’t hide,” said Wiesemeyer, senior vice president of farm policy and trade issues for Informa Economics and consultant for Pro Farmer newsletter.
Faced with an overall national debt that is growing by more than a trillion dollars—yes, with a “t”—every year, President Barack Obama’s administration predicts that total debt as a percentage of the U.S. economy will be 90% in the near future. That places the country in a situation where it would take a whopping 36% increase in personal income tax just to cover the interest on the national debt.
“As perspective, President Obama will add more red ink in his first 15 months in office than President George W. Bush did in eight years as President,” Wiesemeyer said. “The projected $18.5 trillion debt in 2020 would more than double the size of debt when Obama took office, and the annual interest on that debt would exceed $800 billion.”
The U.S. budget deficit is now almost 11% of gross domestic product. The result, according to Wiesemeyer: a debt sentence that will impact every corner of the country. Before predicting what that could mean for farmers, he said he hopes he is wrong.
Here are a handful of Wiesemeyer’s key predictions:
- Finance issues will escalate in agriculture because of bank consolidation and tighter credit conditions.
- Interest rates will increase.
- Budget cuts made to agriculture programs “will come after the Nov. 2 election.”
- Changes will occur in the crop insurance programs.
- Programs, such as Medicare and Social Security, will be cut.
- Fewer dollars will be spent on research and development.
On the upside, Wiesemeyer mentioned “the rise of the rest:” the growing middle class in China, India, Indonesia and Latin America. “That can be a growth generator for U.S. agriculture if farmers are allowed to be competitive,” he said. “We need a balanced regulatory approach and trade policy that gives farmers an opportunity for more market access.”