More Stimulus and More Unsustainable Debt

by: David I. Templeton, CFA
Monday President Obama announced a $50 billion infrastructure stimulus plan that he hopes will create new jobs during this slow economic recovery. He also proposed creating an "infrastructure bank" where the government would decide which projects are worthy of federal funding. Having the federal government take over more control of a segment of the private sector is concerning. The infrastructure bank will be on top of the federal government's additional control over health care and the automobile industry. Historically, projects/expenses that are controlled by the government sector have been done in a less efficient manner than the private sector.

As the below chart details, the amount of total treasury debt, nearing $14 trillion, now surpasses the size of the U.S economy as measured by GDP. This trend in the debt is unsustainable and should be addressed sooner versus later.
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From The Blog of HORAN Capital Advisors