US federal government indebtedness relative to US GDP: an ...

I think most people understand that the United States has a debt problem, but I am not sure all that many people necessarily understand the magnitude of this debt. According to the treasurydirect.gov website, US federal government debt (as of Thursday, 8/16) stands at $15.96 trillion (source: http://www.treasurydirect.gov/NP/BPDLogin?application=np)). Since US GDP (as of June 30, 2012; see http://bit.ly/kM8cxa) is $15.6 trillion, this implies that the US debt to GDP ratio currently stands at more than 100%.

Using the resources cited in the previous paragraph, one can determine US debt totals and debt to GDP ratios at various points in recent history. On the day that George W. Bush was first inaugurated (January 20, 2001), US federal government debt stood at $5.73 trillion, and the US debt to GDP ratio was 57%. By the time that President Bush?s second term came to an end (on January 20, 2009), US federal government debt had grown by $4.9 trillion (to $10.63 trillion), and the US debt to GDP ratio stood at 74%.

Next, let?s look at what has happened since President Obama took office on January 20, 2009. Since then, US federal government debt has grown by an additional $5.33 trillion, going from $10.63 trillion to $15.96. Breaking the numbers down a bit more, President Bush?s two administrations accounts for 4.9/15.96 = 30.7% of the current national debt, President Obama (after just three years and seven months in office) accounts for 5.33/15.96 = 33.4%, and the previous 42 presidents cumulatively account for ?only? 5.73/15.96 = 35.04% of total US federal government debt.

The graph below (source: http://bit.ly/PxbO63) shows the US debt to GDP ratio over the period 1966-2012. I don?t about y?all, but the fact that this ratio is accelerating as we move through time is very disconcerting. Economists Carmen Reinhart and Ken Rogoff note that episodes in world history where debt ratios exceed 90% are not only rare, but also impede economic growth (see ?Debt and growth revisited? (source: http://www.voxeu.org/article/debt-and-growth-revisited)).

Source: http://risk.garven.com/2012/08/19/us-federal-government-indebtedness-relative-to-us-gdp-an-historical-perspective/

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