Source: International Monetary Fund
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Just eyeballing it, it appears the debt as a percent of GDP was around 60% around 2000; and about 65% as recently as 2007. It looks as though it will rise by 40 percentage points between during the 10-year period from 2007 to 2017.
Especially galling is the $1.1 trillion dollar (10-year) health entitlement was passed only two months ago. The cost of which is likely to triple in the next decade.
This chart is showing only debt to the public. It leaves out the debt the government owes itself, which is over $4 trillion.
This has occurred primarily by borrowing the IOUs in the trust funds, and substituting new IOUs.
From a report entitled “Financial Audit, Bureau of the Public Debt’s Fiscal Years 2009 and 2008 Schedules of Federal Debt,” published by the GAO:
Page 2 “While both are important, debt held by the public and intragovernmental debt holdings are very different.
Interest on debt held by the public is paid in cash and represents a burden on current taxpayers. In contrast, intragovernmental debt holdings typically do not require cash payments from the current budget or represent a burden on the current economy.
This intragovernmental debt and related interest represent a claim on future resources and hence a burden on future taxpayers and the future economy.”
That future has arrived, however, as the expenses exceeded the income of the HI trust fund in 2008 and the Social Security trust fund this year.
In that case, only interest is paid.
When the trust funds become more depleted, then principal will have to be paid, Treasury securities will have to be redeemed, just as if intragovernmental debt was real, live debt to the public.
Because the effects are not immediate, they are lurking in the years ahead, intragovernmental debt is downplayed, as in this graph.
When the two types of debt become “equal,” watch out!
It’s been a long time since my grandfather said, “What you owe, you owe; what you own you may not own.”
For this report, go to:
I like that quote, Don.
It’s interesting that we’ve been hearing about our impending doom for over two decades now. Are our public schools not doing enough to educate kids about how much of a hole government spending is creating for the US economy? (That’s sort of a rhetorical question.)
That’s something I’ve never understood about the education system. I learned about chemistry (95% of which I’ve forgotten) and physics (another 95% of which I’ve forgotten), but no one ever taught me to balance my own checkbook or how to read the contract with my cell phone company. No one ever one mentioned the deficit or talked about Medicare or Medicaid.
People complain about the apathy of young voters, but perhaps it’s not apathy. It’s being uninformed. All it takes is a one semester course (First Lesson: “How old folks are feeding off your paycheck”) to educate kids about the importance of voting.
The Obama Administration is going to bankrupt us before he leaves office.
John provided a very interesting link to the IMF’s Report “Navigating the Fiscal Challenges Ahead.”
On page 85, our gross debt as a percent of GDP is 92.6%.
That is only exceeded by 5 other countries.
Japan is 227.1% Iceland is 119.9%, and Greece is 133.2%.
Belgium is 100.1% and Italy is 118.6%.
The only feasible solution is a sensible mix of spending cuts and tax increases, but the call to such bipartisan policy will of course be drowned out by the terrified shrieks of the government infringement and excessive taxation. If Republican aren’t willing to compromise on deficit reduction they shouldn’t have voted for the Bush tax cuts, too bad so sad…….
I’m not so certain I agree.
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