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It was more than twice the $40-billion deficit that Wall Street economists surveyed by Reuters had
forecast and was striking since April marks the filing deadline for individual income taxes that are
the main source of government revenue.
Department officials said that in prior years, there was a surplus during April in 43 out of the past
56 years.
The government has now posted 19 consecutive monthly budget deficits, the longest string of
shortfalls on record.
For the first seven months of fiscal 2010, which ends September 30, the cumulative budget deficit
totals $799.68 billion, down slightly from $802.3 billion in the comparable period of fiscal 2009.
Outlays during April rose to $327.96 billion from $218.75 billion in March and were up from
$287.11 billion in April 2009. It was a record level of outlays for an April.
Department officials noted there were five Fridays in April this year, which helped account for
higher outlays since most tax refunds are issued on that day.
But for the first seven months of the fiscal year, outlays fell to $1.99 trillion from $2.06 trillion in the
comparable period of fiscal 2009, partly because of repayments by banks of bailout funds they
received during the financial crisis.
Receipts in April -- mostly from income taxes -- were $245.27 billion, up from $153.36 billion in
March but lower than the $266.21 billion taken in during April 2009.
Receipts from individuals, who faced an April 15 filing deadline for paying 2009 taxes, fell to
$107.31 billion from $137.67 billion in April 2009.
The U.S. full-year deficit this year is projected at $1.5 trillion on top of a $1.4 trillion shortfall last
year.
White House budget director Peter Orszag told Reuters Insider in an interview on Wednesday that
the United States must tackle its deficits quickly to avoid the kind of debt crisis that hit Greece.
GREECE
May 12, 2010 2:42pm EDT To Anacreon in heaven where he sat in full glee,
A few sons of harmony sent a petition,
That he their inspirer and patron would be,
When this answer arrived from the jolly old Grecian:
Voice, fiddle aud flute, no longer be mute,
I’ll lend you my name and inspire you to boot!
And besides I’ll instruct you like me to entwine
The myrtle of Venus and Bacchus’s vine.
—– We are all Greeks now.
May 12, 2010 3:31pm EDT Watching Europe, watching Europe. Everything is a mess in
Europa. Wake up the biggest problems are still in the US. Wall
Street must gain for what? The biggest mistake in history has
been made by your government.
May 12, 2010 3:35pm EDT Stop the damned spending… We are going off a fiscal cliff.
jindy60
May 12, 2010 3:36pm EDT My account can’t be overdrawn… I still have checks left!
May 12, 2010 3:37pm EDT The Trojan horse Obama is right on track where he wants us.
May 12, 2010 3:38pm EDT G’bye ya’ll. Been nice knowing you as “Fellow Americans” but I
think I’ll keep my posterior down here in the Republic of Texas as
the house of cards collapses. Hey, at least we have an embassy
we can re-establish in London (still has our name on it and
everything). No other “state” can lay that claim!!
Summary Table 2.
CBO’s Baseline Budget Outlook
Total, Total,
Actual 2011- 2011-
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2015 2020
In Billions of Dollars
Total Revenues 2,105 2,175 2,670 2,964 3,218 3,465 3,625 3,814 3,996 4,170 4,352 4,563 15,941 36,836
Total Outlays 3,518 _____
_____ 3,524 3,650
____ 3,613
____ 3,756
____ 3,940
____ 4,105
____ 4,335
____ 4,521
____ 4,712
____ 5,000
____ 5,250 _____
____ 19,065 _____
42,883
Total Deficit (-) or Surplus -1,414 -1,349 -980 -650 -539 -475 -480 -521 -525 -542 -649 -687 -3,124 -6,047
On-budget -1,551 -1,434 -1,076 -757 -659 -608 -619 -659 -659 -669 -765 -793 -3,719 -7,263
Off-budgeta 137 86 96 108 120 133 139 138 134 127 116 107 595 1,216
End of the Year 53.0 60.3 65.3 66.6 66.3 65.6 65.4 65.5 65.5 65.7 66.1 66.7 n.a. n.a.
Memorandum:
Gross Domestic Product
(Billions of dollars) 14,236 14,595 14,992 15,730 16,676 17,606 18,421 19,223 20,036 20,823 21,667 22,544 83,425 187,719
CBO
CURRENT BUDGET PROJECTIONS: SELECTED TABLES FROM CBO’S BUDGET AND ECONOMIC OUTLOOK 2
Table E-1.
CBO’s Year-by-Year Forecast and Projections for Calendar Years 2009 to 2020
Estimated Forecast Projected
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Nominal GDP
(Billions of dollars) 14,253 14,706 15,116 15,969 16,918 17,816 18,622 19,425 20,231 21,033 21,882 22,770
Nominal GDP
(Percentage change) -1.3 3.2 2.8 5.6 5.9 5.3 4.5 4.3 4.1 4.0 4.0 4.1
Real GDP
(Percentage change) -2.5 2.2 1.9 4.6 4.8 3.9 2.9 2.5 2.3 2.2 2.2 2.3
Unemployment Rate
(Percent) 9.3 10.1 9.5 8.0 6.3 5.3 5.1 5.0 5.0 5.0 5.0 5.0
Three-Month Treasury
Bill Rate (Percent) 0.1 0.2 0.7 1.9 3.0 3.9 4.2 4.4 4.7 4.8 4.8 4.8
Ten-Year Treasury
Note Rate (Percent) 3.2 3.6 3.9 4.2 4.5 4.9 5.2 5.4 5.6 5.6 5.6 5.6
Tax Bases
(Billions of dollars)
Domestic economic profits 990 1,263 1,307 1,387 1,462 1,487 1,471 1,468 1,484 1,506 1,542 1,588
Wages and salaries 6,329 6,517 6,671 7,149 7,624 8,061 8,445 8,818 9,189 9,554 9,938 10,365
Tax Bases
(Percentage of GDP)
Domestic economic profits 6.9 8.6 8.6 8.7 8.6 8.3 7.9 7.6 7.3 7.2 7.0 7.0
Wages and salaries 44.4 44.3 44.1 44.8 45.1 45.2 45.3 45.4 45.4 45.4 45.4 45.5
Congressional Budget Office; Department of Commerce, Bureau of Economic Analysis; Department of Labor, Bureau of Labor
Statistics; Federal Reserve Board.
Notes: Percentage changes are measured from one year to the next.
GDP = gross domestic product; PCE = personal consumption expenditure.
a. The personal consumption expenditure price index.
b. The personal consumption expenditure price index excluding prices for food and energy.
c. The consumer price index for all urban consumers.
d. The consumer price index for all urban consumers excluding prices for food and energy.
e. The employment cost index for wages and salaries of workers in private industry.
CURRENT BUDGET PROJECTIONS: SELECTED TABLES FROM CBO’S BUDGET AND ECONOMIC OUTLOOK 3
Actual Forecast Projected
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Nominal GDP
(Billions of dollars) 14,236 14,595 14,992 15,730 16,676 17,606 18,421 19,223 20,036 20,823 21,667 22,544
Nominal GDP
(Percentage change) -1.4 2.5 2.7 4.9 6.0 5.6 4.6 4.4 4.2 3.9 4.1 4.0
Real GDP
(Percentage change) -2.9 1.6 1.8 3.9 4.9 4.3 3.0 2.6 2.4 2.1 2.3 2.2
GDP Price Index
(Percentage change) 1.5 0.9 0.9 1.0 1.1 1.2 1.5 1.7 1.8 1.8 1.8 1.8
a
PCE Price Index
0.3 1.9 1.2 1.1 1.1 1.2 1.5 1.7 1.8 1.8 1.8 1.8
Core PCE Price Index b
(Percentage change) 1.7 1.3 1.0 0.9 1.0 1.2 1.5 1.7 1.7 1.8 1.8 1.8
c
Consumer Price Index
(Percentage change) -0.3 2.4 1.4 1.2 1.1 1.3 1.6 1.9 2.0 2.0 2.0 2.0
Core Consumer Price Indexd
(Percentage change) 1.8 1.7 1.0 0.9 1.0 1.2 1.6 1.9 2.0 2.0 2.0 2.0
e
Employment Cost Index
(Percentage change) 1.9 1.5 1.4 1.9 2.4 2.8 3.0 3.0 3.0 3.0 3.0 3.0
Unemployment Rate
(Percent) 8.5 10.2 9.8 8.4 6.7 5.4 5.1 5.0 5.0 5.0 5.0 5.0
Three-Month Treasury
Bill Rate (Percent) 0.2 0.2 0.5 1.5 2.7 3.7 4.1 4.4 4.6 4.8 4.8 4.8
Ten-Year Treasury
Note Rate (Percent) 3.2 3.5 3.8 4.2 4.5 4.8 5.1 5.3 5.6 5.6 5.6 5.6
Tax Bases
(Billions of dollars)
Domestic economic profits 905 1,226 1,298 1,362 1,445 1,487 1,476 1,466 1,482 1,497 1,532 1,576
Wages and salaries 6,374 6,432 6,638 7,027 7,504 7,961 8,349 8,726 9,099 9,459 9,841 10,254
Tax Bases
(Percentage of GDP)
Domestic economic profits 6.4 8.4 8.7 8.7 8.7 8.4 8.0 7.6 7.4 7.2 7.1 7.0
Wages and salaries 44.8 44.1 44.3 44.7 45.0 45.2 45.3 45.4 45.4 45.4 45.4 45.5
Congressional Budget Office; Department of Commerce, Bureau of Economic Analysis; Department of Labor, Bureau of Labor
Statistics; Federal Reserve Board.
Notes: Percentage changes are measured from one year to the next.
GDP = gross domestic product; PCE = personal consumption expenditure.
a. The personal consumption expenditure price index.
b. The personal consumption expenditure price index excluding prices for food and energy.
c. The consumer price index for all urban consumers.
d. The consumer price index for all urban consumers excluding prices for food and energy.
e. The employment cost index for wages and salaries of workers in private industry.
Actual
2009 2010 2011 2012 2013 2014 2015
In Billions of Dollars
Revenues
Individual income taxes 915 945 1,258 1,434 1,595 1,729 1,854
Corporate income taxes 138 148 269 321 352 397 368
Social insurance taxes 891 878 934 993 1,056 1,115 1,165
Other revenues 161 205 212 219 218 228 242
_____ _____ _____ _____ _____ _____ _____
Total Revenues 2,105 2,176 2,673 2,967 3,221 3,469 3,629
On-budget 1,451 1,535 2,000 2,256 2,467 2,671 2,793
Off-budge 654 642 673 711 754 797 836
Outlays
Mandatory spending 2,094 1,969 2,058 1,982 2,063 2,177 2,267
Discretionary spending 1,237 1,367 1,373 1,345 1,345 1,356 1,372
Net interest 187 209 238 282 337 399 462
_____ _____ _____ _____ _____ _____ _____
Total Outlays 3,518 3,545 3,668 3,609 3,746 3,931 4,101
On-budget 3,001 2,988 3,090 3,003 3,110 3,265 3,402
Off-budge 517 557 579 605 636 666 699
Deficit (-) or Surplus -1,413 -1,368 -996 -642 -525 -463 -472
On-budget -1,550 -1,453 -1,089 -747 -643 -593 -609
Off-budget 137 85 94 106 118 131 137
Total,
2011-
2016 2017 2018 2019 2020 2020
In Billions of Dollars
Revenues
Individual income taxes 1,969 2,091 2,199 2,316 2,448 18,894
Corporate income taxes 390 396 403 406 419 3,721
Social insurance taxes 1,212 1,260 1,310 1,361 1,416 11,820
Other revenues 247 254 262 272 283 2,437
_____ _____ _____ _____ _____ ______
Total Revenues 3,818 4,000 4,174 4,355 4,567 36,872
On-budget 2,947 3,092 3,229 3,373 3,543 28,371
Off-budge 871 908 945 982 1,024 8,501
Outlays
Mandatory spending 2,412 2,523 2,633 2,834 3,005 23,955
Discretionary spending 1,401 1,425 1,449 1,484 1,517 14,067
Net interest 517 573 626 678 729 4,841
_____ _____ _____ _____ _____ ______
Total Outlays 4,331 4,521 4,708 4,996 5,251 42,862
On-budget 3,595 3,744 3,887 4,127 4,329 35,552
Off-budge 736 777 821 869 922 7,310
Nondefense
International affairs 52.9 4.5 57.4 58.8 1.5 2.5%
General science, space, and
technology 31.0 0.0 31.0 31.3 0.4 1.2%
Energy 5.3 0.0 5.3 6.4 1.1 20.0%
Natural resources and environment 36.5 0.0 36.5 35.7 -0.8 -2.2%
Agriculture 6.9 1.2 8.0 6.6 -1.4 -18.1%
Commerce and housing credit 8.5 0.0 8.5 2.3 -6.2 -72.6%
Transportation 35.8 0.0 35.8 33.7 -2.1 -5.9%
Community and regional development 15.9 7.1 23.0 20.7 -2.3 -9.9%
Education, training, employment, and
social services 89.3 0.0 89.3 76.1 -13.2 -14.7%
Health 58.1 0.0 58.1 59.8 1.7 2.9%
Medicare (Administrative costs) 5.9 0.0 5.9 6.5 0.6 9.4%
Income security 66.2 0.0 66.2 66.4 0.2 0.3%
Social Security (Administrative costs) 5.8 0.0 5.8 6.3 0.5 7.9%
Veterans benefits and services 53.2 0.0 53.2 57.2 3.9 7.4%
Administration of justice 51.7 0.0 51.7 48.9 -2.9 -5.5%
General government 19.1 1.4 20.5 20.2 -0.3 -1.6%
Other 0.0 0.0 0.0 0.0 0.0 -0.7%
____ ___ ____ ____ ____ ____
Subtotal, nondefense 542.1 14.1 556.2 536.8 -19.4 -3.5%
Defense excluding Iraq and Afghanistan 554.1 2.0 556.1 573.8 17.7 3.2%
The annual government deficit or surplus refers to the cash difference between government receipts and spending
ignoring intra-governmental transfers. The gross debt increases or decreases as a result of this unified budget deficit
or surplus. However, there is certain spending (supplemental appropriations) that add to the gross debt but are
excluded from the deficit. The total debt has increased over $500 billion each year since FY 2003, with increases of
$1 trillion in FY2008 and $1.9 trillion in FY2009.[6]
United States public debt 2
History
USDebt by GDP since 1948:Annual
and Cumulative [7]
The United States has had public debt
since its inception. Debts incurred
during the American Revolutionary
War and under the Articles of
Confederation led to the first yearly
reported value of $75,463,476.52 on
January 1, 1791. Over the following 45
years, the debt grew, briefly contracted
to zero on January 8, 1835 under
President Andrew Jackson but then
quickly grew into the millions again.[8]
The US Federal Debt from 1800 to 1999
The first dramatic growth spurt of the
debt occurred because of the Civil
War. The debt was just $65 million in
1860, but passed $1 billion in 1863 and
had reached $2.7 billion following the
war. The debt slowly fluctuated for the
rest of the century, finally growing
steadily in the 1910s and early 1920s
to roughly $22 billion as the country
paid for involvement in World War
I.[8]
After this period, the growth of the gross debt closely matched the rate of inflation where it tripled in size from $260
billion in 1950 to around $909 billion in 1980. Gross debt in nominal dollars quadrupled during the Reagan and
Bush presidencies from 1980 to 1992. The Public debt quintupled in nominal terms.
In nominal dollars the public debt rose and then fell between 1992 and 2000 from $3T in 1992 to $3.4T in 2000.
During the administration of President George W. Bush, the gross debt increased from $5.6 trillion in January 2001
to $10.7 trillion by December 2008,[9] rising from 58% of GDP to 70.2% of GDP. During March 2009, the
Congressional Budget Office estimated that gross debt will rise from 70.2% of GDP in 2008 to 100.6% in 2012.[10]
United States public debt 3
2010 (4 13,050.8 90 ? ?
june)
Debt ceiling
The Second Liberty Bond Act of 1917 established a statutory limit on federal debt.[13] Congress had previously
approved each debt issuance separately. The debt limit provided the U.S. Treasury with more leeway in the
administration of debt, allowing for modern management techniques in government finance.
The U.S. Treasury Department now conducts more than 200 sales of debt by auction every year. The Treasury has
been granted authority by Congress to issue such debt as was needed to fund government operations as long as the
total debt (excepting some small special classes) does not exceed a stated ceiling.
[14]
The most recent increase in the U.S. debt ceiling to $14.3 trillion by H.J.Res. 45 and was signed into law on
February 12, 2010.
United States public debt 4
Components
Estimated ownership
As is apparent from the chart, a little less Estimated ownership of US public debt in 2008.
than half of the total national debt is owed to
the "Federal Reserve and intragovernmental
holdings". The foreign and international holders of the debt are also put together from the notes, bills, and bonds
sections. Below is a chart for the data as of June 2008:
United States public debt 5
The government accounts for these corporations as if they are unconnected to its balance sheet. At the inception of
the conservatorship, the U.S. Treasury contracted to receive US$1 billion in senior preferred shares, and a warrant
for 79.9% of the common shares from each GSE, as a fee to fund, as needed, up to US$100 billion total for each
GSE (in exchange for more senior preferred stock), in order to maintain solvency and adequate capital ratios at the
GSEs, thereby supporting all senior (normal) liabilities, subordinated indebtedness, and guarantees of the two firms.
Some observers see this as an effective nationalization of the companies that ultimately places taxpayers at risk for
all their liabilities[17] [18]
The net exposure to taxpayers is difficult to determine at the time of the takeover and depends on several factors,
such as declines in housing prices and losses on mortgage assets in the future.[19] The Congressional Budget Office
has recommended incorporating the assets and liabilities of the two companies into the federal budget due to the
degree of government control over the entities.[20] The 5-year credit default swap spread for U.S. treasuries had risen
to 18 basis points per annum as of 9 September 2008 as a result of market perception regarding the increased debt
load of the government.[20]
On January 8, 2009, Moody's said that only 4 of the 12 Federal Home Loan Banks (FHLB) may be able to maintain
minimum required capital levels and the U.S. government may need to put some of them into conservatorship. [21]
According to Bloomberg, the FHLB is the largest U.S. borrower after the federal government. [21]
Foreign ownership
The US debt in the hands of foreign governments was 25% of the total in 2007,[22] virtually double the 1988 figure
of 13%.[23] Despite the declining willingness of foreign investors to continue investing in US dollar denominated
instruments as the US dollar fell in 2007,[24] the U.S. Treasury statistics indicate that, at the end of 2006, non-US
citizens and institutions held 44% of federal debt held by the public.[25] About 66% of that 44% was held by the
central banks of other countries, in particular the central banks of Japan and China. In May 2009, the US owed China
$772 billion.[26]
United States public debt 6
In total, lenders from Japan and China held 44% of the foreign-owned debt.[27] This exposure to potential financial
or political risk should foreign banks stop buying Treasury securities or start selling them heavily was addressed in a
recent report issued by the Bank of International Settlements, which stated, "'Foreign investors in U.S. dollar assets
have seen big losses measured in dollars, and still bigger ones measured in their own currency. While unlikely,
indeed highly improbable for public sector investors, a sudden rush for the exits cannot be ruled out completely."[28]
On May 20, 2007, Kuwait discontinued pegging its currency exclusively to the dollar, preferring to use the dollar in
a basket of currencies.[29] Syria made a similar announcement on June 4, 2007.[30] In September 2009 China, India
and Russia said they were interested in buying IMF gold to diversify their dollar-denominated securities.[31]
The following is a list of the Foreign Owners of U.S. Treasury Securities as listed by the U.S. Treasury:[27]
Special Administrative Region of the People's Republic of China (Hong Kong) 152.4 4.1
Unfunded obligations
The U.S. government is committed under current law to mandatory payments for programs such as Medicare,
Medicaid and Social Security. The GAO projects that payouts for these programs will significantly exceed tax
revenues over the next 75 years. The Medicare Part A (hospital insurance) payouts already exceed program tax
revenues and Social Security payroll taxes fully cover payouts only until 2017. These deficits require funding from
other tax sources or borrowing.[51]
The present value of these deficits or unfunded obligations is an estimated $45.8 trillion. This is the amount that
would have to be set aside during 2009 such that the principal and interest would pay for the unfunded commitments
through 2084. Approximately $7.7 trillion relates to Social Security, while $38.2 trillion relates to Medicare and
Medicaid. In other words, health care programs are nearly five times as serious a funding challenge as Social
United States public debt 9
Security. Adding this to the national debt and other federal commitments brings the total obligations to nearly $62
trillion.[62]
The Congressional Budget Office (CBO) has indicated that: "Future growth in spending per beneficiary for Medicare
and Medicaid—the federal government’s major health care programs—will be the most important determinant of
long-term trends in federal spending. Changing those programs in ways that reduce the growth of costs—which will
be difficult, in part because of the complexity of health policy choices—is ultimately the nation’s central long-term
challenge in setting federal fiscal policy."[63]
There is a significant difference between the reported budget deficit and the change in debt. The key differences are:
1) The Social Security surplus, which reduces the "off-budget" deficit often reported in the media; and 2)
Non-budgeted spending, such as for the Iraq and Afghanistan wars. The debt increased by approximately $550
billion on average each year during the 2003-2007 period, but then increased over $1 trillion during FY 2008.
United States public debt 10
The cumulative debt of the United States in the past 8 completed fiscal years was approximately $4.3 trillion, or
about 43% of the total national debt of ~$10.0 trillion as of September 2008.[64] [65]
Interest expense
Budgeted net interest on the public
debt was approximately $240 billion in
fiscal years 2007 and 2008. This
represented approximately 9.5% of
government spending. Interest was the
fourth largest single budgeted
disbursement category, after defense,
Social Security, and Medicare.[66]
Despite higher debt levels, this
declined to $189 billion in 2009 or
approximately 5% of spending, due to
lower interest rates. Average interest
rates declined due to the crisis from
1.6% in 2008 to 0.3% in 2009.[67]
Public debt owned by foreigners has increased to approximately 50% of the total or approximately $3.4 trillion.[69]
As a result, nearly 50% of the interest payments are now leaving the country, which is different from past years
when interest was paid to U.S. citizens holding the public debt. Interest expenses are projected to grow dramatically
as the U.S. debt increases and interest rates rise from very low levels in 2009 to more typical historical levels. CBO
estimates that nearly half of the debt increases over the 2009-2019 period will be due to interest.[70]
Should interest rates return to historical averages, the interest cost would increase dramatically. Historian Niall
Ferguson described the risk that foreign investors would demand higher interest rates as the U.S. debt levels increase
over time in a November 2009 interview.[71]
United States public debt 11
Debt clocks
In several cities around the United States, there are national debt
clocks—electronic billboards that illustrate government debt.
Some also attempt to show the money owed per capita or per
family. There is a significant level of fluctuation day-to-day, both
up and down, so any "clocks" must be continually re-set with
proper values.
The first and most famous debt clock, the National Debt Clock
located near Times Square in New York City, was created by real
estate investor Seymour Durst.[72] [73] With Seymour's death, his
son Douglas Durst took over responsibility for the clock through
the Durst Organization.
Although the total debt continued to increase, the clock was
deactivated in 2000 when the public debt began to decrease due to
budget surpluses.[74] However, following large increases in the
debt (total and public) a few years later, the clock was reactivated
in July 2002.[75]
The NYC debt clock in late 2009.
In 2004, the original clock was unmounted from its location near
42nd Street; the building has since made way for One Bryant Park.
An updated model, which could run backwards, was installed one block away on a Durst building at 1133 Avenue of
the Americas. Since September 30, 2008, when the debt surpassed $10 trillion, the clock's dollar sign has been
replaced by the extra digit. An upgrade adding to the digits had been announced for 2009, but so far has not been
undertaken.
The 2010 Budget proposed by President Barack Obama projects significant debt increases, both in terms of dollars
and relative to GDP.[80] [81] The debt is projected to nearly double to $20 trillion by 2015, but is expected to increase
to nearly 100% of GDP by 2020 and remain at that level thereafter. These estimates assume real GDP growth (after
inflation) ranging from 2.6% to 4.6% annually from 2010 through 2019, which exceeds Blue Chip consensus
estimates.[82]
During FY 2008, approximately 76.6% of federal spending was in the following categories: Departments of Health
and Human Services (19.8%), Defense (20.3%) and Veterans Affairs (11.8%); Social Security Administration
(18.2%); interest on the public debt (6.6%).[83]
The Office of Management and Budget forecasts that, by the end of fiscal year 2012, gross federal debt will total
$16.3 trillion. Thus, the debt will equal 101% of gross domestic product, which represents a milestone in the U.S.
economy. Public debt alone, which excludes amounts that the government owes its citizens via various trust funds,
will be 67% of GDP by the end of fiscal 2012.[84]
perceives a bond is at an increased risk of default, the CDS written on those bonds will increase in price.
• TIPS spreads: A key measure of inflation expectations among U.S. bond market investors is the difference
between the yield on nominal Treasury bonds and the yield for Treasury inflation-protected securities, or “TIPS.”
This difference is a gauge of investors’ beliefs about future U.S. inflation rates. A growing spread between
nominal Treasuries and TIPS would indicate that investors are concerned that U.S. fiscal and monetary policy
could lead to higher inflation in the future.[85]
money the federal government owes (and pays interest on) to itself.
Current projections indicate the lower debt held by the public figure will hit 90% of GDP by 2020.[93]
See also
US topics:
• History of the U.S. public debt - a table containing historical debt data
• US total cumulative debt per person
• National debt by U.S. presidential terms
• Emergency Economic Stabilization Act of 2008 - part of the Troubled Asset Relief Program
• United States federal budget - analysis of federal budget spending and long-term risks
• Economy of the United States - discusses U.S. national debt and economic context
General:
• Public debt - a general discussion of the topic
• Balance of payments
• Budget deficit
• Deficit
• Inflation
• Securities
• National bankruptcy
• Fiat currency
International:
• Global debt
• List of public debt - list of the public debt for many nations, as a percentage of the GDP
References
[1] http:/ / www. whitehouse. gov/ omb/ budget/ fy2011/ pdf/ hist. pdf
[2] (http:/ / www. ustreas. gov/ education/ faq/ markets/ national-debt. shtml) Treasury Faq
[3] US GAO Financial Audit: Bureau of the Public Debt's Fiscal Years 2004 and 2003 Schedules of Federal Debt GAO-05-116 (http:/ / www.
gao. gov/ docdblite/ details. php?rptno=GAO-05-116) November 5, 2004.
[4] Treasury Direct (http:/ / www. treasurydirect. gov/ NP/ BPDLogin?application=np)
[5] United States Budget -Section 7 - Table 7.1 (http:/ / www. gpoaccess. gov/ usbudget/ fy11/ hist. html)
[6] Treasury Direct (http:/ / www. treasurydirect. gov/ govt/ reports/ pd/ histdebt/ histdebt_histo5. htm)
[7] http:/ / www. magcom. org/ usdebt. html
[8] TreasuryDirect. Government - Historical Debt Outstanding – Annual (http:/ / www. treasurydirect. gov/ govt/ reports/ pd/ histdebt/ histdebt.
htm). United States Department of the Treasury.
[9] Bureau of the Public Debt - Input Dates 1/1/2001 and 12/31/2008 (http:/ / www. treasurydirect. gov/ NP/ BPDLogin?application=np)
[10] Table 1-1 : Comparison of Projected Revenues, Outlays, and Deficits in CBO’s March 2009 Baseline and CBO’s Estimate of the President’s
Budget (http:/ / www. cbo. gov/ ftpdocs/ 100xx/ doc10014/ 03-20-PresidentBudget. pdf)
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• Wright, Robert (2008). One Nation Under Debt: Hamilton, Jefferson, and the History of What We Owe. Mc-Graw
Hill. ISBN 0071543937.Argues that America completely paid off its first national debt but is unlikely to do so
again.
• Bonner, William; Wiggin, Addison (2006). Empire of Debt: the Rise of an Epic Financial Crisis. Wiley.
ISBN 047178253X. Argues that America is a world empire that uses credit in lieu of tribute and that history
United States public debt 17
External links
• Documentary about the debt, "Ten Trillion and Counting" (http://www.pbs.org/wgbh/pages/frontline/
tentrillion/), by PBS Frontline
• Bureau of the Public Debt (http://www.publicdebt.ustreas.gov/)
• The gross and public debt (http://www.treasurydirect.gov/NP/BPDLogin?application=np)
• The United States Public Debt, 1861 to 1975 (http://eh.net/encyclopedia/?article=noll.publicdebt)
• GAO Citizen's Guide - 2008 (http://www.gao.gov/financial/citizensguide2008.pdf)
• The United States Public Debt placed in context to the Worlds Gold Supply (http://www.michaelburns.net/
USDebt.shtml)
Article Sources and Contributors 18
License
Creative Commons Attribution-Share Alike 3.0 Unported
http:/ / creativecommons. org/ licenses/ by-sa/ 3. 0/
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News » Washington Politics The Oval: Tracking the Obama Presidency USA TODAY On Politics Census
Enlarge By Alex Wong, Getty Images It won't be the last threat Bowles gets this
year as he directs an 18-member, bipartisan
Rep. Paul Ryan, shown here in March, has proposed commission through an ocean of red ink that
reductions in future Medicare and Social Security has never been deeper or more foreboding.
benefits for people under 55, a politically difficult
idea. Under Obama's budget plan, the USA's debt
in 2020 would be nearly the size of the entire
economy then. Interest costs would be $900 billion, five times
today's level.
PUBLIC OPINION
The White House, Congress, budget experts and typical
Americans are growing anxious about the nation's mounting
debt, which is helping to fuel the rise of the anti-tax, anti-big
government Tea Party movement.
A USA TODAY/Gallup Poll in late March found that nearly two-thirds disapproved of Obama's handling of the
deficit.
Nearly 80% said it would be very important in their votes for Congress this fall — more than terrorism or the war
in Afghanistan.
The public awareness is best exemplified by the Tea Party movement, which has used the rise in government
spending and debt to motivate thousands of people across the country.
On Thursday, Tea Party activists will gather at the Washington Monument to rally against big government and the
record deficit.
"Things are being done to you, not for you," warned David Walker, the former U.S. comptroller general, at a
"Fiscal Solutions" forum at the University of Maryland this month.
"Very depressing," groused Rennie Silva, a 26-year-old graduate student in public policy, after the presentation.
"We need to throw out the scoundrels who are making some of these irresponsible decisions."
For now, the deficit is manageable, and necessary to help prod the economy back to health, say economists
such as White House budget director Peter Orszag.
So far this fiscal year, the debt held by the public — not including money the government owes itself — is 58% of
the U.S. economy.
It's roughly half Italy's 113% debt as a share of the economy's annual output. Japan's is 105%; Britain, France
and Germany are between 62% and 70%.
Interest on the debt can still be paid without major tax increases; creditors and credit agencies aren't panicking
usatoday.com/…/2010-04-12-deficit_N… 2/6
— yet.
Because of that, some liberals say deficit reduction should not be the government's Holy Grail, particularly when
unemployment still hovers near 10%.
Spending that benefits future generations should not be sacrificed, they say. It can boost economic growth, which
would makes the debt a lesser percentage of the economy.
"This idea that we're on a precipice and about to fall off a cliff — we're nowhere close to that," says Dean Baker,
co-director of the liberal Center for Economic and Policy Research.
He notes that in Britain, the debt reached more than 200% of the economy after World War II.
Conservatives who have been content with smaller deficits and want to cut rather than raise taxes are less
sanguine now that Obama's budget forecasts an annual deficit still hovering above 5% of the economy in 2020.
"If there was a time for good deficits, that time is long gone," says Andrew Roth, a vice president at the
conservative Club for Growth.
"Deficits are never OK; they're tolerable. And they're not tolerable now."
Moody's Investors Service issued a warning in March that the nation's triple-A credit rating would come under
pressure unless economic growth exceeded projections and tougher actions were taken to tackle the deficit.
A reduced credit rating would cause creditors to demand higher interest rates, raising the cost of borrowing
money. But under Obama's tax and spending proposals, annual deficits would push the public debt to 90% of
the economy by 2020, a level unseen since the years after World War II. Then, it declined steadily for a quarter-
century until bottoming out at 24% in 1974. Now, the retirement of the Baby Boom generation and rising health
care costs project nothing but steady increases.
Congressional Budget Office director Douglas Elmendorf calls the 90% projection "very worrisome." Eventually,
the global economy would be unable to absorb so much U.S. debt, forcing the government to borrow more from
domestic sources of savings.
That would cause interest rates to rise and investment spending to fall leading to "an excruciating set of trade-
offs nobody would want to live through," Orszag says.
"There aren't any easy answers, like cutting waste, fraud and abuse, or growing our way out of it," says Robert
Bixby, executive director of the Concord Coalition, a fiscal watchdog group.
When the Bowles-Simpson commission sits down to business April 27, the choices it will face are grim,
according to the Congressional Budget Office:
•Health care costs are soaring. Medicare and Medicaid will cost more than $800 billion this year, the CBO says.
By 2020, they'll cost $1.5 trillion.
Raising Medicare's eligibility age from 65 to 67 would save $86 billion over 10 years. Raising the premium for
doctors' bills from 25% to 35% would save $217 billion.
That's peanuts compared to what the Treasury Department projects Medicare will owe over the next 75 years:
$38 trillion.
•Solutions are more readily available for Social Security, which costs $715 billion this year, rising to $1.2 trillion in
2020.
William Novelli, a former CEO of AARP, says possibilities include raising taxes or scaling back benefits for high
earners, and increasing the early and regular retirement ages, now 62 and 67.
Linking the annual increase of initial benefits for each new group of retirees to the rise in prices rather than
faster-growing wages would save $195 billion over 10 years, the budget office says.
Raising the retirement age faster, so that it reaches 67 in 2020 rather than 2027, would save $92 billion.
•More savings are available. Canceling the F-35 jet fighter would save $42 billion over 10 years. Reversing the
Army's projected troop increase would save $92 billion.
Slashing highway funding to shore up the Highway Trust Fund, which helps pay for repairs, would save $107
billion.
•Then there are taxes. The biggest revenue boost would come from eliminating the Bush tax cuts passed by
Congress in 2001 and 2003. If all of them were wiped out, the government would collect about $2.8 trillion more
in taxes over the next decade, according to CBO.
Ending the deduction for state and local taxes would raise $862 billion over 10 years.
Limiting the deduction for charitable giving to amounts greater than 2% of adjusted gross income would raise
$221 billion.
None of those changes would be popular in Congress, which will get the commission's recommendations in
December only if 14 of 18 commission members can agree on anything.
Democratic leaders have pledged votes on any recommendations, but Congress doesn't have to act.
There were panels on entitlements in 1994, Medicare in 1999, Social Security in 2001, taxes in 2005.
The 1994 panel led by Democratic Sen. Bob Kerrey of Nebraska and Republican Sen. John Danforth of Missouri
laid out the problems facing Medicare, Social Security and other benefit programs, replete with glossy charts.
But in the end, no more than six of the 32 members agreed on any one solution.
"Benefits are popular. Paying for benefits is extremely unpopular," says Danforth, who left the Senate in 1995.
For deficit reduction to succeed, he says, "the public has to get in front of the politicians."
Kerrey, a 1992 presidential candidate and now president of The New School in New York City, says panels such
as the Bowles-Simpson commission can help to create that scenario.
"What you could get is support among the populace for the exceptionally unpopular things you need to do to
solve this problem," he says.
Bowles has been in touch with Microsoft's Steve Ballmer about creating a deficit-reduction video game that would
enable anyone with a computer to take a stab at balancing the budget, much like the 1994 commission did.
Updated for 2010, Kerrey says, such a game could "go viral."
At Third Way, a left-of-center think tank, President Jon Cowan draws on his experience from 1992, when he
helped start a Generation X group called "Lead ... or Leave."
More than 100 congressional candidates, as well as presidential hopeful Ross Perot, signed on to the group's
challenge to halve the federal deficit in four years or retire from Congress. The federal deficit was an issue in
several campaigns that year.
The key now, Cowan says, is to tell lawmakers: "You are in political trouble if you do not deal with it."
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