The U.S. Is Not Drowning In Debt

[Bfgrn]

What neither side seems to recognize — or at least acknowledge — is that what matters about the debt isn’t the dollar amount per se, but how much it costs us to service it. And by that measure, the debt isn’t nearly as big a problem as it’s being made out to be.

Yes, the federal debt has grown by nearly $3 trillion dollars in the past three years. And yes, the dollar amount of that debt is quite large (in excess of $14 trillion and headed toward $15 trillion should the ceiling be raised). But large numbers are not the problem. The U.S. has a large economy (slightly larger than that debt number). And, crucially, we have very low interest rates.

Because of those low rates, the amount the U.S. government pays to service its debt is, relative to the size of the economy, less than it was paying throughout the boom years of the 1980s and 1990s and for most of the last decade. The Congressional Budget Office estimates that net interest on the debt (which is what the government pays to service it) would be $225 billion for fiscal year 2011. The latest figures put that a bit higher, so let’s call it $250 billion. That’s about 1.6% of American output, which is lower than at any point since the 1970s – except for 2003 through 2005, when it was closer to 1.4%.

Under Ronald Reagan, the first George Bush, and Bill Clinton, payments on federal debt often got above 3% of GDP. Under Bush the second, payments were about where they are now. Yet suddenly, we are in a near collective hysteria.

The U.S. Is Not Drowning In Debt | Moneyland | TIME.com

[apple0154]

What neither side seems to recognize — or at least acknowledge — is that what matters about the debt isn’t the dollar amount per se, but how much it costs us to service it. And by that measure, the debt isn’t nearly as big a problem as it’s being made out to be.

Yes, the federal debt has grown by nearly $3 trillion dollars in the past three years. And yes, the dollar amount of that debt is quite large (in excess of $14 trillion and headed toward $15 trillion should the ceiling be raised). But large numbers are not the problem. The U.S. has a large economy (slightly larger than that debt number). And, crucially, we have very low interest rates.

Because of those low rates, the amount the U.S. government pays to service its debt is, relative to the size of the economy, less than it was paying throughout the boom years of the 1980s and 1990s and for most of the last decade. The Congressional Budget Office estimates that net interest on the debt (which is what the government pays to service it) would be $225 billion for fiscal year 2011. The latest figures put that a bit higher, so let’s call it $250 billion. That’s about 1.6% of American output, which is lower than at any point since the 1970s – except for 2003 through 2005, when it was closer to 1.4%.

Under Ronald Reagan, the first George Bush, and Bill Clinton, payments on federal debt often got above 3% of GDP. Under Bush the second, payments were about where they are now. Yet suddenly, we are in a near collective hysteria.

The U.S. Is Not Drowning In Debt | Moneyland | TIME.com

Also, the wealth of a country is determined by the wealth of it's citizens. That's why it's equally incorrect for some to say the US can not afford a health care plan or look after it's elderly.

In every case it's just nonsense.

[Guns Guns Guns]

Debt, deficits and debt ceilings are cover for Teabagger hatred for the Black president, now that the Birther ploy failed.

[cancel2 2022]

What neither side seems to recognize — or at least acknowledge — is that what matters about the debt isn’t the dollar amount per se, but how much it costs us to service it. And by that measure, the debt isn’t nearly as big a problem as it’s being made out to be.

Yes, the federal debt has grown by nearly $3 trillion dollars in the past three years. And yes, the dollar amount of that debt is quite large (in excess of $14 trillion and headed toward $15 trillion should the ceiling be raised). But large numbers are not the problem. The U.S. has a large economy (slightly larger than that debt number). And, crucially, we have very low interest rates.

Because of those low rates, the amount the U.S. government pays to service its debt is, relative to the size of the economy, less than it was paying throughout the boom years of the 1980s and 1990s and for most of the last decade. The Congressional Budget Office estimates that net interest on the debt (which is what the government pays to service it) would be $225 billion for fiscal year 2011. The latest figures put that a bit higher, so let’s call it $250 billion. That’s about 1.6% of American output, which is lower than at any point since the 1970s – except for 2003 through 2005, when it was closer to 1.4%.

Under Ronald Reagan, the first George Bush, and Bill Clinton, payments on federal debt often got above 3% of GDP. Under Bush the second, payments were about where they are now. Yet suddenly, we are in a near collective hysteria.

The U.S. Is Not Drowning In Debt | Moneyland | TIME.com

If the US loses its AAA status and is no longer the world's reserve currency then inflation and interest rates could very easily rise alarmingly.

http://www.mailonsunday.co.uk/money/...gged-game.html

[Rune]

What Tom says is, of course, true. We must not default.

Regardless, though, as has been pointed out, the debt is not the mountainous problem alluded to by the far right.

The GOP ran up the debt and ruined the economy purposefully, so they could attack social programs and attempt to dismantle certain sections of government such as the EPA and the Dept. Of Education.

Don't forget, money didn't disapear during the great recession, it was simply taken by the wealthy.
A poor economy serves them as well as a good one, as proven by their high profit levels now.

Fuck them.

[NOVA]

The U.S. Is Not Drowning In Debt

We've borrowed 14 TRILLION dollars.....

If no one lends us more money next week, will it dawn on you that we are indeed....Drowning In Debt

[DamnYankee]

Remember when Bush II was president the liberals here were complaining about the debt? That was Mott's big excuse for hating Bush back then.

[Guns Guns Guns]

Still sore that the Birther tactic tanked out?

[NOVA]

Remember when Bush II was president the liberals here were complaining about the debt? That was Mott's big excuse for hating Bush back then.

Hey DY....I see you've got the virus too....you get the same thing I do after almost every post......I hardly notice it anymore

Today, 02:59 PM
\(\(\/)/)/
┬ ┭ ┮ ┯ ┰ ┱ ┲

This message is hidden because \(\(\/)/)/ is on your ignore list.

[cawacko]

Bfgrn, why do you feel the U.S. has come so close to losing its AAA status? (and the rating agencies have said it is not because of the debt limit showdown)

[Guns Guns Guns]

http://www.creditloan.com/infographi...entage-of-gdp/

[Stallion]

14 trillion dollars and needing to raise that amount means we are not drowning in debt? Only a blind fool would believe that.

[DamnYankee]

Hey DY....I see you've got the virus too....you get the same thing I do after almost every post......I hardly notice it anymore

Today, 02:59 PM
\(\(\/)/)/
┬ ┭ ┮ ┯ ┰ ┱ ┲

This message is hidden because \(\(\/)/)/ is on your ignore list.

I don't have him on ignore but I don't pay much attention to his posts. He's on the same shelf as Solitary.

[hotdog]

How long before are debt doubles at are current rate of borrowing? Is 150% or 200% of GDP debt dangerous.

[Guns Guns Guns]

How long before are debt doubles at are current rate of borrowing? Is 150% or 200% of GDP debt dangerous.

"Are" current rate of borrowing?


Did you mean "our", retard?