U.S. Borrowing Now 100 Percent of GDP

[Smokey]

This new economic news can't be too good. If what we own is the same amount as what we are in debt, does that mean we have zero assets?

From Yahoo! News:

"US debt shot up $238 billion to reach 100 percent of gross domestic project after the government's debt ceiling was lifted, Treasury figures showed Wednesday.

Treasury borrowing jumped Tuesday, the data showed, immediately after President Barack Obama signed into law an increase in the debt ceiling as the country's spending commitments reached a breaking point and it threatened to default on its debt.

The new borrowing took total public debt to $14.58 trillion, over end-2010 GDP of $14.53 trillion, and putting it in a league with highly indebted countries like Italy and Belgium."

http://news.yahoo.com/us-aaa-rating-...204040123.html

[Pat D]

So what? Many people buy houses using mortgages that are multiples of their annual income.

The point is to borrow to some purpose and to be able to pay if off the debts in the long term. The U.S. national debt is quite manageable with some rational policies such as taxing the rich for their fair share. Meanwhile, in the short term, government spending is needed to create jobs and repair and renew the infrastructure.

The Congressional Progressive Caucus has prepared a budget proposal which would create jobs, fix up the crumbling infrastructure, improve the health care system and cut its costs, and produce a surplus in 10 years.

Congressional Progressive Caucus : FY2012 Progressive Budget

Unfortunately, it has not received nearly enough coverage in the mass media.

[GMichael]

This new economic news can't be too good. If what we own is the same amount as what we are in debt, does that mean we have zero assets?

From Yahoo! News:

"US debt shot up $238 billion to reach 100 percent of gross domestic project after the government's debt ceiling was lifted, Treasury figures showed Wednesday.

Treasury borrowing jumped Tuesday, the data showed, immediately after President Barack Obama signed into law an increase in the debt ceiling as the country's spending commitments reached a breaking point and it threatened to default on its debt.

The new borrowing took total public debt to $14.58 trillion, over end-2010 GDP of $14.53 trillion, and putting it in a league with highly indebted countries like Italy and Belgium."

US borrowing tops 100% of GDP: Treasury - Yahoo! News

Just like my sister.
She has a credt card with a $1000 limit. Her statement comes in saying that she owes $950. Her first thought is that she has $50 more that she could spend, and runs out to find something to buy.

[Pat D]

Just like my sister.
She has a credt card with a $1000 limit. Her statement comes in saying that she owes $950. Her first thought is that she has $50 more that she could spend, and runs out to find something to buy.

Analogies with individuals can only go so far. In fact, the Second World War provided an enormous boost to the economy through public spending with the national debt rising to about 120% of the GDP, People had saved a lot of money and began spending it, and veterans got educational benefits. But the tax revenues were high enough to reduce the debt considerably until about 1980, when the Republican policies started increasing the national debt.

United States public debt - Wikipedia, the free encyclopedia

The refusal to raise taxes on the rich and large corporations under Bush resulted in a large loss of revenue, even though he carried on two wars and did not fund his Medicaid changes.

[Smokey]

The point is to borrow to some purpose and to be able to pay if off the debts in the long term. The U.S. national debt is quite manageable with some rational policies such as taxing the rich for their fair share. Meanwhile, in the short term, government spending is needed to create jobs and repair and renew the infrastructure.

I think at some point, we really have to make some sacrifices such as deep budget cuts including social service programs as this trend can not go on forever. The problem is these cuts (and as you said raising taxes) are not popular amoung politicians and voters, so they tend to let it ride.

Just imgine how much we would save just on interest alone if there was no national debt.

[Feanor]

Analogies with individuals can only go so far. In fact, the Second World War provided an enormous boost to the economy through public spending with the national debt rising to about 120% of the GDP, People had saved a lot of money and began spending it, and veterans got educational benefits. But the tax revenues were high enough to reduce the debt considerably until about 1980, when the Republican policies started increasing the national debt.

United States public debt - Wikipedia, the free encyclopedia

The refusal to raise taxes on the rich and large corporations under Bush resulted in a large loss of revenue, even though he carried on two wars and did not fund his Medicaid changes.

I agree with your perspective on the debt and overall US ecomomic position.

Although the US must get it deficit, (as distinct to debt), down to managable levels in the medium term, (say a decade), this ought to be done with a combination of tax increases as well as spending cuts, (starting with the military).


The US currently faces three fundamental problems, two of them mainly ideological:

1. Increasing globalisation and compeditive threat from (primarily) Asia. Inevidably the US will decline relative to economies such as China and India. Sensible, "level playing field" trade treaties will help, but only to ease the transition. The challenge isn't to prevent this relative decline, but to mitigate it in the interest of average Americans.
2. The US is afflicted with invalid and counterproductive "supply-side" economic doctrines. The level of economic activity in any economy is principally determined by demand, not "supply". "Bribing the rich" and hopefully have benefits "trickled down" is a notion that's been around since Reagan -- and has obviously failed for average Americans.
3. A great many American are abused of the notion that "small government" (i.e. absolutely mininmal government) is best. But one ought understand that capitalism, (private enterprise), is best when properly regulated in the interest of the people. The current "Great Recession" is proof that unregulated capitalism doesn't at all times deliver an efficiently functioning economy. Also, the "small goverment" mentallity is thwarting economically useful undertakings, such as infrastructure renewal, and social constructive measures such as universal healthcare.

[Feanor]

I think at some point, we really have to make some sacrifices such as deep budget cuts including social service programs as this trend can not go on forever. The problem is these cuts (and as you said raising taxes) are not popular amoung politicians and voters, so they tend to let it ride.

Just imgine how much we would save just on interest alone if there was no national debt.

Debt plays a useful role in our personal lives, e.g. to purchase a home using a mortage, and can enhance our well-being an financial status overtime.

Likewise most businesses, large and small, rely on debt to "leverage" their resources for better profits.

Government too can use debt for useful purposes. First, some undertakings such as infrastructure renewal ought to be viewed as investment that wil pay off overtime, (the same as your house or a business's plant & equipment). And secondly, and no less importantly, goverments ought to run deficits in times of economic downturn to stimulate the economy closer to its inherent capacity.

Justification for the second type of government borrowing lies in the realm of macroeconomics. Macroeconomics unfortunately, is not easy to understand intuitively; certainly not by the average layman -- nor by most politicians either. Analogies to person finance are simply inadequate for a grasp of the subject.

[frenchmon]

So, you’re a Republican that hates taxes? Well, since you do not like taxes or government, please kindly do the following.
1. Do not use Medicare.
2. Do not use Social Security
3. Do not become a member of the US military, who are paid with tax dollars.
4. Do not ask the National Guard to help you after a disaster.
5. Do not call 911 when you get hurt.
6. Do not call the police to stop intruders in your home.
7. Do not summon the fire department to save your burning home.
8. Do not drive on any paved road, highway, and interstate or drive on any bridge.
9. Do not use public restrooms.
10. Do not send your kids to public schools.
11. Do not put your trash out for city garbage collectors.
…
13. Do not drink clean water.
14. Do not visit National Parks.
…
16. Do not eat or use FDA inspected food and medicines.
…
18. Do not walk or run on sidewalks.
…
23. Do not use the judiciary system for any reason.
24. Do not ask for an attorney when you are arrested and do not ask for one to be assigned to you by the court.
…
26. Do not use cures that were discovered by labs using federal dollars.
27. Do not fly on federally regulated airplanes.
…
31. Do not listen to tsunami, hurricane, or earthquake alert systems.
…
33. Do not use the internet, which was developed by the military.
…
36. Do not ask for FEMA assistance when everything you own gets wiped out by disaster.
37. Do not ask the military to defend your life and home in the event of a foreign invasion.
38. Do not use your cell phone or home telephone.
39. Do not buy firearms that wouldn’t have been developed without the support of the US Government and military. That includes most of them.
40. Do not eat USDA inspected produce and meat.
…
43. Do not buy any vehicle that has been inspected by government safety agencies.
44. Do not buy any product that is protected from poisons, toxins, etc…by the Consumer Protection Agency.
…
46. Do not use Veterans benefits or military health care.
…
48. Do not apply for unemployment benefits.
49. Do not use any electricity from companies regulated by the Department of Energy.
50. Do not live in homes that are built to code.
51. Do not run for public office. Politicians are paid with taxpayer dollars.
52. Do not ask for help from the FBI, S.W.A.T, the bomb squad, Homeland Security, State troopers, etc…
53. Do not apply for any government job whatsoever as all state and federal employees are paid with tax dollars.
54. Do not use public libraries.
55. Do not use the US Postal Service.
…
61. Do not ask the Department of Agriculture to provide a subsidy to help you run your farm.
…
63. Do not ask for taxpayer dollars for your oil company.
64. Do not ask the federal government to bail your company out during recessions.
…
70. Do not ask the Army Corps of Engineers to rebuild levees when they break.
71. Do not let the Coast Guard save you from drowning when your boat capsizes at sea.
72. Do not ask the government to help evacuate you when all hell breaks loose in the country you are in.
…
79. Do not use public transportation.
80. Do not drink water from public water fountains.
81. Do not whine when someone copies your work and sells it as their own. Government enforces copyright laws.
82. Do not expect to own your home, car, or boat. Government organizes and keeps all titles.
…
85. Do not seek help from the US Embassy if you need assistance in a foreign nation.
86. Do not apply for a passport to travel outside of the United States.
…
88. Do not adopt a child through your local, state, or federal governments. [Laffy Note: Check that out, anti-choicers]
…
94. Do not use money printed by the US Treasury.
95. Do not complain when millions more illegal immigrants cross the border because there are no more border patrol agents.
96. Do not attend a state university.
97. Do not see any doctor that is licensed through the state.
…
101. Do not expect to be able to vote on election days. Government provides voting booths, election day officials, and voting machines which are paid for with taxes.
…


Just thought it was interesting.