Mar 14, 2010
Scary Fact of the Day: United States Debt Edition
Investors Business Daily is fast becoming invaluable on current U.S. fiscal policy and the probability of a (United States) sovereign debt crisis if we don’t change course.
Friday’s editorial contained this startling fact:
Just last year, U.S. public debt totaled $7.5 trillion — a sum equal to all the indebtedness accumulated from our 225 years in existence as a nation. But by 2020, total U.S. public debt will be $20.3 trillion — an increase of 171% in just 10 years.
By itself, such a sum wouldn’t matter. But it’s the weight it will place on the economy that’s important. Last year, debt as a share of GDP — the recognized measure for how indebted a country is — stood at 53%. By 2020, it will be over 90%.
The even scarier part? Those figures do not account for off balance sheet liabilities like Social Security and Medicare … which alone represent another 107 trillion dollars in unfunded liabilities as of last year, and, according to the National Center for Policy Analysis, are on a course to “engulf the entire federal budget.”
And these numbers assume a fairly rosy scenario. If debt levels continue to rise as projected, the drag on economic growth (or ever high tax rates) will compromise economic growth and undermine our ability to pay those debts. The danger that the debt will spiral out of control and decimate the economic future of the United States is no longer merely theoretical.
Related: “What Unsustainable Looks Like”
There’s also more at Powerlineblog.