Debt now equals total US Economy

[doom&gloom]

And the hits just keep on comin' folks. I said the Republicans wouldn't do a damn thing about spending, and they won't. No one wants their sacred cow slaughtered, and every program (excep the poor of course) has it's "financial" backers in the for of K Street lobbyists.

We are headed down the "Road to Ruin". the only question is will Obama have this hung around his neck. Bets people?

No wonder commodities are running like "the bulls"...

http://www.washingtontimes.com/news/...al-us-economy/
Debt now equals total U.S. economy
By Stephen Dinan
-
The Washington Times
12:16 p.m., Monday, February 14, 2011

President Obama projects that the gross federal debt will top $15 trillion this year, officially equalling the size of the entire U.S. economy, and will jump to nearly $21 trillion in five years’ time. (Frankly, I don;t think we get those five years myself)

Amid the other staggering numbers in the budget Mr. Obama sent to Congress on Monday, the debt stands out — both because Congress will need to vote to raise the debt limit later this year, and because the numbers are so large.

Mr. Obama‘s budget said 2011 will see the biggest one-year jump in debt in history, or nearly $2 trillion in a single year. And the administration says it will reach $15.476 trillion by Sept. 30, the end of the fiscal year, to reach 102.6 percent of gross domestic product (GDP) — the first time since World War II that dubious figure has been reached. (what happened to all the liberals who labelled Bush a big spender?)
*snip*

[dcarrigg]

Re: Debt now equals total US Economy

And the hits just keep on comin' folks. I said the Republicans wouldn't do a damn thing about spending, and they won't. No one wants their sacred cow slaughtered, and every program (excep the poor of course) has it's "financial" backers in the for of K Street lobbyists.

We are headed down the "Road to Ruin". the only question is will Obama have this hung around his neck. Bets people?

No wonder commodities are running like "the bulls"...

http://www.washingtontimes.com/news/...al-us-economy/

Debt now equals total U.S. economy
By Stephen Dinan
-
The Washington Times
12:16 p.m., Monday, February 14, 2011

President Obama projects that the gross federal debt will top $15 trillion this year, officially equalling the size of the entire U.S. economy, and will jump to nearly $21 trillion in five years’ time. (Frankly, I don;t think we get those five years myself)

Amid the other staggering numbers in the budget Mr. Obama sent to Congress on Monday, the debt stands out — both because Congress will need to vote to raise the debt limit later this year, and because the numbers are so large.

Mr. Obama‘s budget said 2011 will see the biggest one-year jump in debt in history, or nearly $2 trillion in a single year. And the administration says it will reach $15.476 trillion by Sept. 30, the end of the fiscal year, to reach 102.6 percent of gross domestic product (GDP) — the first time since World War II that dubious figure has been reached. (what happened to all the liberals who labelled Bush a big spender?)
*snip*

It needs to be taken care of at some point. I still think it's a revenue problem. On the other hand, a 100% of annual GDP debt is not the end of the world.

http://en.wikipedia.org/wiki/List_of...by_public_debt

[charliebrown]

Re: Debt now equals total US Economy

This chart shows the U.S. debt at roughly 58%. But the federal defecit is roughly 14.1T and GNP is roughly 14.3T.
What does the chart on wikipedia not count? Is it debt help by other U.S. government entities? Such as the T's held
by the fed, or the T's held by social security, govenment pension plans etc?

In Rogoff's and Reinharts book, "This time is different" they state that once a country's debt to GDP ratio exceeds 90%, then
the GDP will be negatively impacted, because the capital redirection to finance government spending impacts the amount available to the hopefully more productive private sector. What debt to GDP ratio are they talking about? I'm confused by this.

Shortly after the war, the debt to GDP hit an all time ratio of 120%. I think through increases in taxation, and GDP growth, the debt was paid down, and since GDP grew the ratio fell. However ... This is not 1950. The other major world economies have not been destroyed by war. Although marginal federal tax rates are lower now than in the 50's, other taxes have filled the void. Higher state taxes, payroll taxes, sales taxes, real-estate taxes. I'm not sure the feds can just increase marginal tax rates at this time and get the same revenue enhancment.

I know that Japan's debt to GDP is really high, but as EJ and others point out, almost all the debt has been purchased by
its own citizens who are relatively rich and have a high propensity to save. I have heard that the clock is ticking, and
some day soon, Japan may have to find foreigner's to finance their debt and that they are not going to find anyone with
such low interest rates. This happens when the aging population spends down their savings for daily living.

Also, I think roughly 30% of the U.S. T's are held by foreign gvt's. If they decide not to buy, who is going to pick up the slack?

[charliebrown]

Re: Debt now equals total US Economy

I think I have the answer to some of my questions.

This link http://zfacts.com/p/461.html

Shows gross debt, and debt held in the SS trust fund, and other gvt trust funds.
So the public debt is gross debt - gvt trust fund debt. = 14.2T - 4.6T = 9.6T public debt, which is around 60% of GDP.
Which sort of maps to the wikipedia page.

I assume that the trust fund debt could be looked at like potential public debt, because as the trust funds are depleted, their assets will have to be sold, and unless the gvt is running a surplus, the asset sail will result in net T's being sold to public to pay off the trust fund asset.

I know SS is now running a deficit. I can't remember about medicare, if it has switched to defict spending too.

The website zfacts seems to have the theme that cutting spending now is suicide, it should have been cut years ago during the good years. Yes this is true, but we are past that, do we increase spending now? or decrease it?

[mooncliff]

Re: Debt now equals total US Economy

(what happened to all the liberals who labelled Bush a big spender?)[/U][/I]
*snip*

Well, the situation then and the situation now are not the same are they? Obama walked into this and is being asked to manage it. Let's just cut everything then. I don't think you will like the result, but let's just do it so that we have the crash and it will be over and done with... oh, wait, that will be Obama's fault too...

[lektrode]

Re: Debt now equals total US Economy

And the hits just keep on comin' folks. I said the Republicans wouldn't do a damn thing about spending, and they won't.

tho i'm more inclined daily to agree with you on this, i must repeat what we've heard the past few years: "he/they have only just arrived, dont we owe him/them a chance to see what they can do?..."

as everybody on the dem side kept saying about the current occupant.(to that, i actually agreed - lasted about a month..)
but for the fact that in the immed aftermath(more like current event) of the biggest meltdown in history, the fastest blowout of EMPLOYMENT in terms of raw numbers of jobless, a situation as bad if not worse than the 1930's? - what was the first thing they _sqaundered_ their 'historic' political capital/achievement on? the nightmare known as obamacare - never mind that nobody in congress could be bothered to read the thousands of pages it contains before 'deeming it passed' in the middle of the night the day before the xmas recess - never mind that the vast majority of public opinion was solidly against it (not to be confused with the spin from the chattering class) - and what do they do next? a 'stimulous' of the public sector unions and the welfare class for _another_ trillion that 'stimulated' what, precisely? then shaft GM's bondholders (not that i feel too awfully sorry for them), while handing control of what used to be the biggest american/world industry to its unions, as if that represents a winning formula (ask lee iaccoca how that one will likely work out), with 'cash for klunkers' immed after that, which then jacked up the min price of used cars by at least several thousand bux, thus _screwing_ those of us who simply cant afford a new car - i mean if orwell (or maybe orson welles) himself was looking for a new storyline, i dont think whats happening could get any 'better' as a plot, do you?

No one wants their sacred cow slaughtered, and every program (excep the poor of course) has it's "financial" backers in the for of K Street lobbyists.

que broken record: ***TERM LIMITS NOW***
because it wont take too much more before the only answer will be to follow the lead of the eqyptians.
(but their 'parade' is likely more calm/civil than same here will end up being, esp if EMployment doesnt start rising)

We are headed down the "Road to Ruin". the only question is will Obama have this hung around his neck. Bets people?

from what i've been able to gather, methinks most of us here have already placed our bets and are about to double down....
oil UP:84.98, ag UP:30.56 and gold.... down? (dont tell me yer starting to hedge...)

It needs to be taken care of at some point. I still think it's a revenue problem. On the other hand, a 100% of annual GDP debt is not the end of the world.

http://en.wikipedia.org/wiki/List_of...by_public_debt

again, i'm beginning to agree that an immed surcharge on incomes above a certain level is getting more urgent by the week, at the very minimum, a removal if the cap on FICA for ALL income, at least until the accounts balance - i still agree with the viewpoint that SPENDING IS OUT OF CONTROL, and none of the bastards in DC are doing a GD thing about it!

but i hold the lamestream media directly responsible for the situation, as they are SELLING US OUT for ad revenues, while the dc aristocracy sells our future prosperity to the chinese, in exchange for vote-buying cash from the bankster mob!

ps: and i dont think comparing our sitch with the rest of the worlds failed 'leadership' on debt/gdp is valid or helpful.

again - i dont mean to offend anybody here, but have seen little in the way of evidence to sway my basic opinion.

[charliebrown]

Re: Debt now equals total US Economy

oh and a few more things ...

Are projections about spending down the SS and medicare trust funds, factoring these large structural issues.

I would argue that there are more low wage jobs being created than high wage, high skilled jobs. Just how many
people you know that were engineers, financial services, manufacturing, accouting, medical etc have been out sourced and are now finding much lower wage jobs to move into. Thus lowering payroll taxes.

We have the 2010 - 2012 reduction in payroll taxes.

What if we have a big bout of inflation, that actually makes it through to the CPI. SS is indexed to CPI.
I bet we see a 5% increase in CPI this year. (bar those pesky substitutions and hedonic adjustments)

The oldies are coming. We also have epidemics of obesity, diabetis, alzheimer's, high blood pressure etc.
Are the medicare curves adjusted for just the increase in age, or is it adjusted based upon a sick population of oldies?
Sorry no offesense to oldies. Not many years before I'm in the group too.

Maybe modern medicine is just too good. 30 years ago a 70 year old with a bad hip would be given a cane and pain meds.
Now they get a $100K hip replacement. This goes for all sorts of new procedures that are common now but did not exist
30 years ago.

[sunskyfan]

Re: Debt now equals total US Economy

No, its not the end of the world. I am sure I can get $100 for my old copy of Windows XP too . The US economy is now 90% vapor.

[lektrode]

Re: Debt now equals total US Economy

Well, the situation then and the situation now are not the same are they? Obama walked into this and is being asked to manage it.

just goes to show what a VERY expensive "harvard liberal arts/law degree" coupled with the vast managerial experience/expertise of a 'community organizer' and less-than-one-term as a senate backbencher bestows on one who decides after writing a book that he's ready for the most powerful job on the planet, doesnt it?

Let's just cut everything then. I don't think you will like the result, but let's just do it so that we have the crash and it will be over and done with... oh, wait, that will be Obama's fault too...

heh - just imagine how desparate they must be getting to have the republicans "win" in 2012....
altho i'm getting to the point that even hilary would've been a better choice.

[lektrode]

Re: Debt now equals total US Economy

No, its not the end of the world. I am sure I can get $100 for my old copy of Windows XP too . The US economy is now 90% vapor.

after lookin win vista over and deciding that nuthin was worth going thru that, i'll second that and raise ya 50....

[c1ue]

Re: Debt now equals total US Economy

Amusing that those of specific party persuasions still like to point fingers at each other.

National debt in 2000 (Accession of Bush II): $5.67 trillion
National debt in 2004: $7.6 trillion
National debt in 2008: $10.7 trillion
National debt today: somewhere over $14 trillion

The good news (for the Republican/Dubya bashers): Bush increased the national debt by some $5 trillion in 8 years (88.7% increase, or 17.2% increase per year)

The bad news (for the Obama fans): Obama has increased the national debt by some $3.5 trillion in 2 year (32.7%, or 15.2% increase per year) - using many of the same policies.

If indeed the total goes to $21 trillion in 5 years, then the increase will be a 96% increase with a yearly average of 10.1%

More importantly - the US at some point will require more debt than the rest of the world has credit to extend.

World GDP in total is about $58 trillion.

The US debt now comprises nearly 25% of the world's GDP.

In turn world total assets equal somewhere around $150 trillion, with total stock/bond/cash being around $50 trillion or $60 trillion.

At some point - relatively close in time - there simply won't be any more money to borrow... or at least the money created to pay won't buy much of anything.

[Thailandnotes]

Re: Debt now equals total US Economy

Over here in Thailand a hip replacement comes in slightly under 10K. XP is free.

[chr5648]

Re: Debt now equals total US Economy

I think alot of people here are missing the point. All you really have to do to see the truth is to pull up any so called 'budget' from any of the administrations of the past 40-50 years and then compare those projections to what actually occurred. These 'budgets' completely ignore the point that another recession could occur in the next 5-10 years. They don't take into account any sort of worst case scenario, but only paint a nice warm and fuzzy portrait. Its always a positive picture, even the fire economy mentions in the fine print that returns are not guaranteed and that past performance does not infer future performance. Wheres the warning sticker on this crap.

If theres one thing I will bet on, its that the projections will not occur.

[doom&gloom]

Re: Debt now equals total US Economy

Well, the situation then and the situation now are not the same are they? Obama walked into this and is being asked to manage it. Let's just cut everything then. I don't think you will like the result, but let's just do it so that we have the crash and it will be over and done with... oh, wait, that will be Obama's fault too...

i'm still a small "c" conservative, but now a full political athiest. they all suck.

that said, the biggest run-up in spending under Bush came when Pelosi controlled the House, AFTER she complained about previous Bush spending. The reality was the Bush spending, like the Obama spending, is meant to prop up a system that has now long since failed to mete out any organic growth. So we try and do it thru debt ad mirrors.

Who will "take the hit" and tell the American people that cannot have it all wihtout higher taxes and less spending and bennies? I though Obama was all about this "change" biz, but he looks like the steroid version of Bush III to me.

Bush was a free-spender. Obama is just as bad a free-spender. Under Bush we constantly heard abot all tis free spending from the liberals (who all of a sudden seemed conservative). Now they are so strangely silent.

Really, I am not just here to beat up the libs, like I say, I hate them all now -- I don't trust a one of them. But until everyone gets in the same boat on this spending largess, we are never gonna turn this thing around.

[dcarrigg]

Re: Debt now equals total US Economy

again, i'm beginning to agree that an immed surcharge on incomes above a certain level is getting more urgent by the week, at the very minimum, a removal if the cap on FICA for ALL income, at least until the accounts balance - i still agree with the viewpoint that SPENDING IS OUT OF CONTROL, and none of the bastards in DC are doing a GD thing about it!

I am glad to be with you on the FICA argument. It's long past time that it should have been implemented, but the middle class doesn't lobby like the wealthy. Obama preemptively caved on that too: http://thecaucus.blogs.nytimes.com/2...security-plan/.



So far as spending goes, I still think it's more of a revenue issue (needs more taxes).



The only spending cuts that need to happen are medical (medicare/medicaid).



Tax rates on high income earners have not been this low since before WWI. For almost a hundred years it worked. Reagan broke it. He broke it on purpose.



Is it a spending problem, or are we just not taxing the FIRE/upper 0.1% enough? Production workers saw real wage gains of just 4.3% from '90-'05. What if you were paid in financial instruments?



The capital gains tax has never been this low. Even the robber barons of the 19th century would have blushed at what their 21st century counterparts had pulled off:



Reagan broke the capital gains tax system too:



Raw data on historic US tax rates is here:

http://www.truthandpolitics.org/top-rates.php.

Meanwhile, no matter what, Obama, Bush or Reagan, they keep starving the beast:



It's starve the beast in action. It's plain and simple. They'll get out the blow horn and scream "spending is out of control." They've been planning on doing it since the 1970s. They will take it from your pay and your retirement. They will freeze your wage. They will take your healthcare. They will give it to the financiers. Do not be fooled.