Skip to comments.US Debt Is Now Equal to Economy
Posted on 01/10/2012 12:38:05 PM PST by yoe
The soaring national debt has reached a symbolic tipping point: Its now as big as the entire U.S. economy.
The amount of money the federal government owes to its creditors, combined with IOUs to government retirement and other programs, now tops $15.23 trillion.
Thats roughly equal to the value of all goods and services the U.S. economy produces in one year: $15.17 trillion as of September, the latest estimate. Private projections show the economy likely grew to about $15.3 trillion by December a level the debt is likely to surpass this month.
(Excerpt) Read more at conservativebyte.com ...
Go to the phones now - call your congressmen and senators.....tell them there can be no more money for Obama to spend and demand an accounting of where the other bailout $$$$$ etc. have gone. How much did the unions get for starters. Obama is slathered in cronyism.
It’s just another one of Bozo’s accomplishments! He must be proud.
Lets not forget his congressional enablers from the gutless stupid party (GOP). They’re as much to blame b/c they refused to flatly tell him ‘No!’. They know what they’re doing is wrong and harmful. In the end when all goes bad there will be no end of excuses. Yes, Barry is to blame but not completely.
“O” wants to raise the debt ceiling, AGAIN
M O R O N!!!!!
Using GAAP (generally accepted accounting principles) instead of phony premises, counting all government debt and not just the Federal balance (i.e. states and local governments), counting the GSE guarantees (government sponsored entities such as Fanny, Freddie, Sally, FDIC, FHA, etc.) and unwinding some of the Fed's policies, yields the staggering total of $100 trillion to $250 trillion depending on who is preparing the estimate.
There is no way this country can ever amortize that total with taxes ... no matter how much the economy eventually recovers!
Sometime, pick up an economic history text and read what happens to countries who default on their debt obligations either through hyperinflation or through repudiation. It's not pretty!
No. Sadly, this is the accomplishment of two parties that have been wedded to the Welfare State for 70 years. The Dems would turn us into a Socialist country if they could. The Republicans have never had the stomach to take an ax to spending. The closest we came was Ronald Reagan, who significantly slowed the growth of spending. But no one has been able to cut it. Today Paul Ryan is considered "radical" because he wants to slow the rate of growth of spending.
Unfortunately, this isn't just Obama. We have screwed ourselves by buying into the Welfare State. And now the game is almost up. The Ponzi Scheme is collapsing and we don't have the will to do what is necessary.
Such progress!!! (Sarcasm)
"To preserve [the] independence [of the people,] we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude. If we run into such debts as that we must be taxed in our meat and in our drink, in our necessaries and our comforts, in our labors and our amusements, for our callings and our creeds, as the people of England are, our people, like them, must come to labor sixteen hours in the twenty-four, give the earnings of fifteen of these to the government for their debts and daily expenses, and the sixteenth being insufficient to afford us bread, we must live, as they now do, on oatmeal and potatoes, have no time to think, no means of calling the mismanagers to account, but be glad to obtain subsistence by hiring ourselves to rivet their chains on the necks of our fellow-sufferers." --Thomas Jefferson to Samuel Kercheval, 1816. ME 15:39
"I deem [this one of] the essential principles of our government and consequently [one] which ought to shape its administration:... The honest payment of our debts and sacred preservation of the public faith." --Thomas Jefferson: 1st Inaugural, 1801. ME 3:322
"I sincerely believe... that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale." --Thomas Jefferson to John Taylor, 1816. ME 15:23
"[With the decline of society] begins, indeed, the bellum omnium in omnia [war of all against all], which some philosophers observing to be so general in this world, have mistaken it for the natural, instead of the abusive state of man. And the fore horse of this frightful team is public debt. Taxation follows that, and in its train wretchedness and oppression." --Thomas Jefferson to Samuel Kercheval, 1816. ME 15:40
According to the GAO, the accrual deficit is $4.2T, far surpassing the $1.3T cash flow deficit. The accrual deficit would be substantially larger with more realistic assumptions in Obamacare. I am not even sure that an accrual deficit makes sense because the federal government has no savings mechanism. Additional revenues would be spent, not saved to prepare for future commitments. It is probably more meaningful to project future levels of government spending and borrowing. Both will substantially accelerate in the coming decades. At the very beginning of the baby boom generation, we have unthinkable deficits. I do not see any path to fiscal sanity as conservatives will never have strong control of government.
The consequences of unsustainable debt and spending are frightening. Contrary to conventional wisdom, this problem is not something that the younger generation will endure. It is a problem that every living generation will endure. The economic collapse will impact seniors the most because they have much less ability to manuever around the difficulties.
Good insights. The entire system is not set up to reserve for future liabilities. Its set up to spend like Hell on transfer payments and to finance that spending by any means possible —taxes and, if taxes are politically unpalatable, borrowing. But then we hit a borrowing limit and the system goes into convulsions like a junkie who can’t get a fix anymore.
We also see models for the end-game and they aren’t pretty. Riots from the transfer payment recipients when they aren’t getting payments anymore. The entrenched entitlement beneficiaries, like seniors, will vote in higher taxes on the productive, in many cases taxes so high that it disincentivizes anyone from making money. The only solution that won’t be tried is cutting benefits and spending in any meanigful way. The productive will leave and we’ll end up with the national equivalent of a Detroit. A burnt out shell of what used to be, reverting to an 1800s economy or nature.
It’s a nice sound bite but a nearly meaningless statistic.
Why compare the total debt to the ANNUAL economic output? One year is an arbitrary length of time. Why not compare to the monthly GDP, or the 10-year GDP, or any other arbitrary period?
If the debt was all due in one year, the comparison might make sense. But the debt consists of a huge number of individual obligations, which are due at many different dates varying from tomorrow to many years from now.
A $20 trillion debt due in June would be a much bigger problem than a $20 trillion debt due in 500 years. The real problem is somewhere in between.
The debt is too big, but comparing the total debt to the annual GDP is a very weak argument to explain why.
And nobody thinks there’s a crash coming. How could that possibly happen in America?
“this problem is not something that the younger generation will endure”
Well, when they jack taxes up so high on all of us, people are just going to quit and evade them however they can just so that they can eat.
And yes, it is coming when they keep raising taxes higher and higher.
There’s just not enough young folks to pull the cart.
Oh, there’s plenty who think there’s a crash coming. Not much more to do about it than brace for impact.
Point is that total debt is growing faster than GDP. There is no practical predictable point at which that will change, meaning it won’t be paid off ever until a crash.
The bigger point is that the interest payments are at some 20% of total spending, which in turn is at least 2x revenue. Near half of all revenue goes just to pay the interest! and that borrowed half of spending just serves to increase those interest payments. Won’t be long until all revenue is just obligatory debt service - an unviable position.
Sure my personal debt exceeds my net income - but I know that the car will be paid off in a few months, the house in a few years, and a hammerlock placed on any other excessive spending will assure that at some point in the near future all debt will be gone (save only that which may leverage greater income).
Debt > GDP, with no plan nor expectation to reduce debt growth to less than GDP growth, amounts to swiping the credit card until paychecks won’t cover the monthly minimums.
Looks like we’re reaching the tipping point.
Seems like it also, in this election.
Half of Americans are brain dead moron sheep.
The election year ads against Obama are writing themselves.
A rock could beat Obama in 2012, so long as that rock ran on the economy as a referendum about Obama’s inept economic policies.
I am fully confident that the GOP can still lose to Obama by avoiding all talk of the economy and focusing only on foreign affairs. The GOP is this dense.