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| NEW YORK, NY - AUGUST 01: The National Debt Clock, a billboard-size digital display showing the increasing US debt, is seen on the corner of Sixth Avenue and West 44th Street on August 1, 2011 in New York City. The House of Representatives successfully passed a bill that would reduce national debt and raise the national debt limit, though the bill still needs to pass the senate. (Image credit: Getty Images via @daylife) |
According to this article, total unfunded US government liabilities are 222 trillion dollars. The population of the US is 312 million. To keep it simple, let's knock off 90 million people as being too young, infirm, whatever, to take on their share of the debt. So, let's say there are 222 million people available to take on the 222 trillion dollars of debt.
How much is that per person? Hmmm.
222,000,000 is 222 million
222,000,000,000 is 222 billion
222,000,000,000,000 is 222 trillion
222,000,000,000,000 divided by 222,000,000 is $1,000,000.
Yes ladies and gentlemen, each able-bodied American's share of government debt and unfunded liabilities is 1 million dollars.
Unless I've made a major error here somewhere, I would say the US is in deep doo-doo.
And, since the government plans to add another trillion dollars to the debt next year, getting dooier by the day.
And that's the way the doing-the-math Ball bounces.
13 comments:
The USA is the richest country in the world, in more than a few senses of the term. I think they can handle this economic/fiscal crisis if they're as smart as they have proven themselves to be in the past.
As Clinton took office, there were big concerns about the American national debt. A few relatively minor changes in spending and taxation led to a growing economy and shrinking debt.
There was even a time, not that long ago, when people on the right were worried about the debt being paid off too quickly.
Case in point: http://www.theglobeandmail.com/report-on-business/rob-commentary/pay-off-the-national-debt-lets-not-be-too-hasty/article724600/
My proposal: let the bush tax cuts expire for the top two percent of wage earners, then, slowly, raise everyone else's taxes back to the level they were when Clinton was in office. How bad could it be to go back (tax-wise) to the time when the economy was fine, and the debt was being paid off? It's worth a try.
The Paul Ryan plan, denounced as draconian, would not balance the books for 20 years. My friend, once debt reaches a certain point, there is no noble way out. The US reached that point in 2008 and went sailing on past it. Next stop: the (Economic) Twilight Zone.
The Paul Ryan plan is about tax cuts (for the rich), not about balancing the budget. If they were interested in balancing the budget, they'd raise taxes, and close loopholes.
I used to think that there was a point-of-no-return for debt. I used to think that it was 100% GDP. I had no particular reason for thinking this. It just seems like a psychologically meaningful number. (Hm... a world not only of sight and sound, but of mind...)
But the UK once had a national debt over 250% GDP. They managed to bring that under control.
http://www.ukpublicspending.co.uk/uk_national_debt_chart.html
The US needs to a) reduce government expenditures, including, if necessary, cutting back on overly generous unrealistic public sector pensions, b) end the loop-holes, and c) raise taxes.
It no longer has the moral fibre to do these things. The self-restraint generation has given way to the entitlement generation. Half of US citizens pay no income taxes and 1/2 receive some form of federal welfare. THEY are not going to be the ones to rise to the occasion.
In fact, as belt-tightening gets worse, more people will opt-out of being a responsible citizen. To wit: more people have gone on Social Security disability under Obama than jobs have been created.
As for the UK, the taxes that responsible persons now pay to subsidize layabouts are just dreadful.
The US government is effectively enslaving its free citizens one debt dollar at a time. You can hold your breath in the amount of time it takes the US to go another million dollars in debt.
The debt has probably increased by $5-$10 million while I typed this.
The fact that the UK has gone over 250% debt to GDP ratio and clawed its way back again (and it did this before it lost its empire... of course before it lost its empire the debt went up again... but I digress) suggests that powerful countries can handle high debt loads and survive.
The problem isn't moral fibre, it's political will.
Also: while it's true that half of americans pay no federal "income tax", many pay payroll taxes (which last time I checked, was a tax on income).
US GDP is about 16 trillion dollars (I think). If total debt and unfunded liabilities -- including social insurance and state/federal pensions -- is 222 trillion, that means that the total debt/liabilities is something like 13-14 times GDP.
That means every American citizen and business would have to hand over 14 years of earnings to eliminate this liability.
It would be interesting to poll Americans to see if they have any sense of how deep their debt is and how profound their obligations.
Singapore runs surpluses rather than deficits and its economy has sky-rocketed. I remember a few years' back its problem was negative unemployment -- it had to import workers. All because it eschewed an overly socialistic model and embraced responsible capitalism.
13-14 times GDP?
I think you're comparing a debt figure that takes into account debt that accrues over decades, and comparing it to the US GDP over one year...
I don't deny that the amount of money they owe is enormous. I just want to assert that they have pulled themselves out of debt before, and other similar countries (e.g., the UK when it was a superpower) have been in worse debt situations.
America could easily bounce back if they do the things you suggest they do.
Their political system at the moment, doesn't seem to allow for it. I'm hoping that November will bring another Obama administration, and a congress that can pass the laws necessary to raise taxes to Clinton-era levels.
Other countries, with different political/electoral systems seem better able to match government spending priorities with government revenue-gathering priorities. Northern Europe, for example, has little or no doubt, decent growth, and sustains a formidable social safety net.
"I think you're comparing a debt figure..."
No, I'm adding in unfunded projected liabilities. So it's debt/liabilities.
If you owed nothing now but knew you would owe 1,000,000 in January, and had no money to pay it, your debt would be zero but your debt/unfunded liabilities would be... ONE MILLION DOLLARS (finger in mouth!)
http://www.bloomberg.com/news/2012-08-08/blink-u-s-debt-just-grew-by-11-trillion.html
anon. continuing to borrow to finance your spending without any possible way to repay the borrowing is irresponsible. the u.s. has slowly dismantled the economic engine that was responsible for financing the growth of the country. when someone else is producing the goods you consume at home and you no longer make the essentials then you can't generate the wealth to pay the debt. of course they can always print more money and pay some debt with devalued dollars but will the world welcome that?
Moral fibre and political will go hand-in-hand. Think Greece.
At this point the US needs a federal VAT as well -- so that everybody is paying taxes.
Of course, the problem is that cutting back debt-fueled spending and cutting back on gov't and increasing taxes will all suck air out of the US economy -- which is already on debt-induced breathing tubes.
"the problem is that cutting back debt-fueled spending and cutting back on gov't and increasing taxes will all suck air out of the US economy"
Clinton raised taxes, and the economy boomed. I'm not saying raising taxes = economic boom. I'm just saying that the US can carefully cut spending and raise taxes and bounce back. It's done it before.
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