If I told you someone tallied up $10,000 in credit card debt and asked how bad that was you would probably tell me you do not have enough information to answer that question. One vital piece of info would be how affluent that person was. For example, if that person were a college student your answer may be different then if it were Bill Gates.
With this general idea in mind we explore the complex world of public finance. If I tell you that a government deficit was $100 billion, you should similarly ask which government, and how affluent they are. The gauge of affluence is measured by economists as Gross Domestic Product (GDP). Thus to put our current spending into perspective we examine how much the government outspend tax revenue this year (the deficit) as a percentage of GDP, and how much money we owe out as a result of past deficits (debt) as a percentage of GDP:
In case you are wondering, the debt was very large in the early 1900’s due to the World Wars.
(Charts were generated by usgovernmentspending.com)
With this general idea in mind we explore the complex world of public finance. If I tell you that a government deficit was $100 billion, you should similarly ask which government, and how affluent they are. The gauge of affluence is measured by economists as Gross Domestic Product (GDP). Thus to put our current spending into perspective we examine how much the government outspend tax revenue this year (the deficit) as a percentage of GDP, and how much money we owe out as a result of past deficits (debt) as a percentage of GDP:
In case you are wondering, the debt was very large in the early 1900’s due to the World Wars.
(Charts were generated by usgovernmentspending.com)
It is scary to look at these charts and see the debt rising. This website shows how bad our debt is to China. www.thetrumpet.com/index.php?q=2460.1126.0.0
ReplyDeleteCan China decide one day that we need to pay them back all of the money we owe? What would happen?
The deficit chart (as percent of GDP) is frightening at best. How many generations will it be before it is reduced? And, what if the economy does not improve in the same cyclical fashion as past recessions? What if government spending continues to flow like water? Lot's of questions and no real clear communicated path forward.
ReplyDeleteBoth our deficit and debt are extremely alarming. The fact that our deficit is at an all time ever high is very scary. I know that in times of economic crisis, we are supposed to have to spend on all these programs in order to make money and create money for the economy. Yet our economy has been in depressions and recessions before and yet never have we spent so much more then we were taking in through taxes. As the mother of a young child, it is frightening to think of what we are leaving our children. At best, they will have zero medicare, social security, etc. At worst, I can't even imagine. As Shanna pointed out above, what does happen if these countries that we owe all this debt to suddenly decide to collect? How can we be considered one of the most powerful nations in the world when we don't technically support ourselves?
ReplyDeleteIt is interesting to me to see the begin of the US federal debt begin to jump in the early 90's, just around the same time that technology on a home and home-office level was becoming more and more popular. It was kept relatively undercontrol, although high, while Clinton was in office. As Bush carried out his two-term presidency which involved 9/11 as well as two multinational wars the debt rose substantially. Of course spending increased with the creation of Homeland Security and increased spending in other safety precautions, but it seems to me that the money we spent in those eight years was carelessly given out and not much attention was paid to the bill until after Bush left office. Government spending has risen astronomically within the last four years--whether it involved the auto and bank bailouts or millions of baby-boomers reaching retirement, hopefully Obama will be able to closely examine our country's spending and alleviate much of the unnecessary spending that is keeping our country from major ground-breaking possibilities.
ReplyDeleteLaine Radell
Excessive spending on Wars has caused the high deficit that the US is facing today. Many people believe that it's due to Welfare programs, education loans not being paid back and Medicare. While these items contribute to the deficit, they are not the main cause. What needs to happen now is an audit of what's trully owed and a plan moving forward on how to resolve this debt? I agree with the other bloggers, that it's a shame. And it makes me worry about the future of our country. The US needs to focus on developing peace with other Nations and keep war out of the picture. The US needs to replenish it's resources and work on building a stronger financial nation.
ReplyDeleteAdrienne Oladipupo
The deficit chart is shocking and scary. We have more debt then ever before and we have not just gotten over a big war or at this point show any way of paying the debt back. The time it will take to pay this debt back will be until i die and probably my children may have to pay for some of it .How is it possible to get in this much debt? The USA is supposed to be the strongest and greatest country in the world, and should not owe this much money. As we get deeper into the recession our debt will grow and the more the government "bails" people out the more money will be coming out of our pockets.
ReplyDeleteAsia