Federal debt rantings - Phil's Rambling Rants
Federal debt rantings|
|Date:||November 22nd, 2004 09:50 am (UTC)|| |
US GDP is (approximately) 40 Trillion dollars, so a debt of 8 Trillion is 20%.
That didn't sound right, and a quick googling gives 2003 GDP as 11 Trillion (according to the US Bureau of Economic Affairs), not 40.
However, the more significant problem is with comparing the federal government's debt to the total GDB of the nation. Even if we believed it was appropriate for the federal government to direct 100% of the resources of the country, it can't use all of those resources for paying debts; most of GDP has to go to internal economic activity or we don't have an economy. The debt the federal government amasses needs to be compared to the income the federal government actually brings in, or in extremis, the income it could conceivably bring in. Total government revenues are somewhere between 1.5 and 2 trillion, which is pretty tiny compared to 8 trillion in debt. The real effects of tax rates on overall economic activity are more complicated than ideologues on either side want to admit, but I'm willing to go out on a limb and say that raising taxes by more than $500B a year, no matter what taxes they were, would certainly cause enormous economic disruption and a significant drop in GDP. So the debt is at least 320% of the income available for servicing it. Appalling and irresponsible but perhaps survivable, if we treated it as a genuine national crisis and actually started fixing it. What's indisputably not survivable is the intention of our leaders to keep adding to the debt forever.