The best analysis I've ever heard on America's financial woes comes from a Canadian named Dr. Ian Lee. You can hear him interviewed here.
In a nutshell, this is his summary of what has occurred over the past 15 years or so:
- During the Bill Clinton years, the federal gov't was taking in about 20% of GDP in taxes and spending about 20% of GDP as well. So things were balanced.
- George W. Bush reduced taxes such that only about 15% of GDP was being collected but 20% of GDP was still being spent. Not good.
- Barack Obama then increased spending quite dramatically but didn't increase taxes. As things now stand, about 15% of GDP is being collected but 25% of GDP is being spent. Even worse.