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Treasury: US Borrowing Tops 100% Of GDP

From the Agence France-Presse:

US borrowing tops 100% of GDP: Treasury

August 3, 2011

US debt shot up $238 billion to reach 100 percent of gross domestic project [sic] after the government’s debt ceiling was lifted, Treasury figures showed Wednesday.

(We assume "gross domestic project" is just a typo for gross domestic production.)

Treasury borrowing jumped Tuesday, the data showed, immediately after President Barack Obama signed into law an increase in the debt ceiling as the country’s spending commitments reached a breaking point and it threatened to default on its debt.

The new borrowing took total public debt to $14.58 trillion, over end-2010 GDP of $14.53 trillion, and putting it in a league with highly indebted countries like Italy and Belgium

So we are in the same league as Italy, which is now reported to be certain to default.

The official limit was hiked $400 billion on Tuesday and will be increased in stages over the next 18 months.

The last time US debt topped the size of its annual economy was in 1947 just after World War II.

When our country was paying off the most expensive war in the history of the world in which it has been fighting for its survival. What are we paying for now?

By 1981 it had fallen to 32.5 percent.

During the Reagan administration? When we are told he was engaged in reckless defense spending?

Ratings agencies have warned the country to reduce its debt-to-GDP ratio quickly or facing losing its coveted AAA debt rating.

Moody’s said Tuesday that the government needed to stabilize the ratio at 73 percent by 2015 "to ensure that the long-run fiscal trajectory remains compatible with a AAA rating."

In other words, we need to reduce our spending by more than 25% over the next decade. When we are in fact still increasing our spending.

This article was posted by Steve on Thursday, August 4th, 2011. Comments are currently closed.

20 Responses to “Treasury: US Borrowing Tops 100% Of GDP”

  1. Right of the People says:

    Well any voodoo economist can tell you the only way to get out of this is to jack up taxes on rich (Republicans only. Don’t want John and Teresa Kerry and the rest of the rich liberal buddies like Algore to be put out, it just wouldn’t be right.)! Those damn slackers obviously aren’t paying their fair share.

    The poor need more X-boxes and 66″ plasma TV’s to keep them occupied between having more babies and going on the Jerry Springer Show.

  2. GetBackJack says:

    As a young man on my own for the first time, I learned early that spending everything I made was beyond the idea of stupid.

    beyond this simple statement, I got nothing ….

    • ezra says:

      “beyond this simple statement, I got nothing ….”

      Neither do the rest of us, but most of us are too stupid to admit it.

      Nevertheless, if you were curious about the similarities and differences between personal and government budgets, there are a ton of sources. Recently, e.g.: http://bigthink.com/ideas/39550

      Also, note that debt in the service of good investments (e.g., a household mortgage) can be a good thing on any level. (e.g., http://en.wikipedia.org/wiki/Parable_of_the_talents_or_minas). Government budgeting, by not taking into account the capital value of the assets invested in, actually discourages capital investment (which obviously has not discouraged spending in general!).

  3. proreason says:

    Have you ever asked youself why the government doesn’t simply reduce its discretionary spending to the level of 2008, or better yet 2000? 2008-level spending would reduce spending by half a trillion, and inflation since 2008 is hardly a factor. 2000-level spending in the discretionary budget, adjusted for inflation, would be 1.1 trillion less than the 2011 budget.

    2000 was the heyday of Clinton’s brilliant economy. Every liberal was thrilled with his performance in the Oval Office and the side corridors. The economy was great. Were people “suffering” in 2000? Inquiring minds want to know.

    Let me repeat, if we simply returned to the halcyon spending year of 2000, the spending would be 1.1 TRILLION less than today AFTER adjusting for inflation….and WITHOUT touching SS and Medicare.

    Yet, you never hear even a hint of doing that, except occasionally on the blogs.

    Yet our politicians found it impossible to find more than 24 billion in savings for next year. (note: 24 billion is 2.2%, repeat 2.2%, of 1.1 trillion). And as we all know, that 24 billion is a trick. It will never happen.

    I wonder why?

    (rhetorical question, of course)

  4. tranquil.night says:

    Leftists rejoice! We are Europe! Social Justice win!

  5. proreason says:

    Here’s some information about Connie Mack’s “Penny Plan”, based on his web-site and data in this site:



    The plan is simple. Cut spending across the board 1% for 6 years, then fix spending at 18% of GDP. The plan claims 7.5 trillion in real savings over 10 years.

    I now agree with the savings, and actually think he is understating them, based on a model I’ve built (yes, I’ve spent years doing that sort of thing, and not for the government so I can make reasonable assumptions). The plan doesn’t dictate where the cuts must be made. They could all be in the military, for example, or none in the military. The only stipulation is that 1% of total sending must be made.

    This creates a big problem, which is that it is virtually certain that Congress would NOT make the cuts, since everybody signing on to a cut of any nature would be demagogued and driven out of office. Therefore, all of the cuts will be across the board, including SS and Medicare.

    The cuts are NOT inflation adjusted. Therefore, if inflation is a conservative 2.5%, SS payments after 6 years will be 80% of what they were (considering inflation) at the beginning. For example, there are a lots of elderly couples getting $2,000 or less (combined) from SS. After 6 years, their income would by $1,600. And something similar would happen to Medicare. There is no question that cuts of that level would be devastating to Seniors. For you non-seniors, imagine living on a near subsistence budget, and then gradually reducing that budget by 20% over 6 years. Horrific. And don’t tell me about shared sacrifice until you are willing to cut YOUR spending by 20%. (and btw, 20% may be undersestimated the SS payment cuts, since Baby Boomers are coming on-board for SS in high numbers. It sounds to me that the 1% annual has to happen even though the SS recipients will be rapidly increasing.)

    Mr. Mack adresses that issue by saying SS and Medicare would have to be reformed. I agree with him in principle, but doubt very seriously that there are any kinds of acceptable short-term reforms that will overcome that huge of a hill in 6 years. Paul Ryan’s plan, for example, keeps SS and Medicare as-is for everyone over 55. In other words, Ryan’s plan doesn’t touch SS and Medicare payments for a decade.

    Longer term, SS and Medicare obviously have to be changed to be sustainable, but the Penny Plan is seriously flawed. I’m not completely opposed to some immediate cuts in SS, but I simply can’t see how a 20% reduction in payments can fly. Medicare is a bit different. In my opinion moving to a voucher program within a few years would be acceptable, but I don’t think doing so would overcome the financial problem posed by SS.

  6. ezra says:


    1981 does not equal “during the Reagan administration”. Reagan took office in 1981. When he left this value was > 50%.

    “In other words, we need to reduce our spending by more than 25% over the next decade. When we are in fact still increasing our spending.” … ummm, I think there are about 3 elementary grade levels of math missing in this statement.

    Much ongoing excitement on this site regarding credit ratings. Please note that this is probably a red herring since financial repression (http://en.wikipedia.org/wiki/Financial_repression) is almost certainly in the works. This is a natural extension of the setup of Basel III.

    • proreason says:

      ezra, Steve was just making some good points, not posing as a math professor.

      The result of 1983 would be close to the result from 1981, and his 25% number is a reaction to the 73% debt-to-gdp ratio from Moody’s, which would certainly have to be true in the first year anyway.

      Why are we spending like we are recovering from a world war anyway?

      lol. Rhetorical question of course. They didn’t like freedom winning.

    • ezra says:

      What does 1983 have to do with it? The value was 39% then. The value rose in every year of the Reagan presidency, so I’m not sure what the point of Steve’s comment about Reagan was.

      I understand and agree with the Moody target, but it would be interesting to have some real math there. Of course, you’d need to project growth, which is the rub. You could easily double spending if you could triple growth.

    • proreason says:

      Well gee ezra, your complaint was that 1981 wasn’t “during the Reagan administration”, which, of course it was. But I passed by your ignorance and said 1983 would be about the same result.

      Steve never said, btw, that 1981 represented Reagen’s first budget.

      Looks to me like YOU are the one who needs to get your facts straight.

      And yes, Reagen increased the deficit. Dare I mention that he sparked a roaring economy for the next 20 years while turning around the worst economy since the Great Depression, while defeating the USSR with his left hand? Personally, I think that was worth a little more than Obamycare and 5 trillion as a payoff to Obama’s brain-dead supporters. But maybe I should check the math on all of that. If I’m a fraction off, it would invalidate the entire comment I guess.

  7. NickB says:

    I’ve engaged liberals on the perils of public debt as a percentage of GDP for over a year, and one hilarious (yet typical) response I got from one utterly clueless liberal (who proclaimed he was “incredibly wealthy” (yet in reality, a house husband)) that he was “just happy that Obama spent a few bucks”.

    I showed this idiot with multiple links how when Bush took office the public debt as a percentage of GDP was 54% and over eight years, rose to 72%. I, as most conservatives, are not happy with an increase of 18% over those eight years, however, under Obama, with his reckless spending, failed “stimuli” (union payoffs), and the Obamacare boondoggle has taken the ratio from 72% to over 100% in just TWO and a half years, a rise of over 28% in that short period of time, 10% more than Bush over the eight years of his Presidency.

    Of course, when confronted with these facts, and the current fiscal calamities in Greece, Ireland, etc..this nitwit said he could care less, which is exactly the Dem/Socialist mantra. Keep spending, nobody will be there to bail the USA out, and the Socialists “come to the rescue” under the guise of “leadership” to “unite the world” under one currency, and proclaim themselves Kings over all humanity.

    The socialists/communists picked Obama, a blithering idiot and political neophyte, for one reason and one reason only…that he could be controlled, told what to do and when to do it, rubber stamp anything from Pelosi/Reid, and kill the economy to do their bidding for them.

    Now the news of the percentage of public debt to GDP hit the streets today, look at what happened on Wall Street…investors are getting OUT of stocks and like investments, and will NOT put their money at risk in an economy that is poised to self implode.

    This is by DESIGN, folks, and don’t let anyone tell you any differently. The Left is hell bent on killing capitalism, and anything the Founding Fathers stood for…and against.

    • proreason says:

      “The Left is hell bent on killing capitalism”


      But I would say Marxists rather than The Left.

      The election of 2012 is becoming more important than 1860. In 1860, the short term was in doubt, but the long-term was not. Slavery was dead, whether in 1865 or1905, it was finished.

      But in 2012, If the marxists somehow win all 3 houses again, this country is dead. If the marxists win the Presidency, the odds of surviving four additional years will be small (50% or less imo), because the factors that have been put in place by Obama will continue to erode the economy and the markets. It may take another 3 or 4 years, but it’s hard to imagine coming out of it without impeaching him.

      If we win all three branches and act boldly immediately, the chances of survival are very good (90% or better). That doesn’t mean that the debt has to be wiped out in one year and unemployment fall to 5%, but there have to be unequivicable actions to move in that direction immediately.

  8. Reality Bytes says:

    BTW – Ezra’s namesake is a prophet from the OT; a “minor” prophet. A teeny tiny itsy bitsy tiny little prophet; still though still a prophet. It’s kinda like a “moderate” republican; a teeny weeny little republican.

    Just kidding Ez! I admire your intellectual standards, however, when a kid with a lemonaide stand can figure out what the president & the majority in Congress can’t, it doesn’t really matter. We’re dealing with fundementals here.

    It’s not the quant guys who make the money. It’s his boss who typically has a far more intuitive approach to the basics of creating wealth. Cause, at the end of the day, that’s really all we’re talking about is growing wealth.

    The basic differences between an Obama liberal & a Reagan conservative’s answers to ending a recession/depression is a liberal believes in distributing wealth according to their proclomations with confiscatory levies & mandates; essentially spending – sorry – investing it in order to create wealth – sorry ‘jobs”. A conservative on the other hand keeps the “investment” with the principals who created it in the first place as much as possible.

    Now which do you think works best?

    And, while I’m at it…On the “Mo Spin Zone” last night, a comment was made that conservatives don’t want their money going to charities (actually they were talking about ObamaCare mandating coverage of contraceptive, abortion aka “woman’s well care or some other BS phrase”) while liberal do.

    Then it hit me. Liberals need to the government to funnel money to Planned Parenthood & God knows who else, because unlike your average Tea Party member who feels guilty NOT putting 10% into the offering plate, liberals are cheap undertipping hypocrits who on average squeak when they walk.

    If there was a liberal charity it wouldn’t last a month because they could get enough of their like minded friends to give them their money! Instead, they put YOUR / OUR money where their mouth is.

    It was an epiphany, which unlike Ezra, is in the NT.

    Gotta go. Payroll day!

    • proreason says:

      Now that you bring him up, we have heard from ezra before.

      Seems like he has whipped up his courage for another juvenile attempt to fight facts with feelings.

      He’ll slink away soon if he hasn’t already.

    • ezra says:

      “Just kidding Ez!”

      Thanks, Reality. You know what they say: Little strokes fell big oaks!

      And glad to have the backing of Mr. Proreason, too!

  9. Reality Bytes says:

    Keep in mind my comparo on libs vs conservatives giving to charity. I’m willing to bet my last dollar (cause that might be all I have with Obama/Pelosi/Reid screwing the economy) that conservatives give far more than liberals on average.

    Last time I checked around 06 or 07, Americans gave nearly 400 billion dollars to charity. How many of them do you think are T Party types & how many are NYT limo libs?

    Which explains why they like higher taxes (while avoiding them personally) because their causes couldn’t survive depending on their kind to support them. They have to take it instead.

    The day’s comin’ Pro & much sooner than they think when the silent majority is going to make a stand; not with violence but with regime change. They’re so codified in Washington, they’re not even aware of it; just some nut every once in a while they can use as a symbol to paint everyone else.

  10. proreason says:

    “I’m willing to bet my last dollar (cause that might be all I have with Obama/Pelosi/Reid screwing the economy) that conservatives give far more than liberals on average.”

    Yes, I have seen that demonstrated many times. It’s a fact.

    But it’s probably even more true than the IRS data shows. A lot of conservatives who can’t itemize still give to charity. You can bet your next to last dollar that no liberal donates anything to charity unless they can deduct it.

  11. Reality Bytes says:

    Coincidence? Geithner keeps his job & Wall St tanks 500+ the next day!

    From the liberal Marketwatch. Surprisingly, even they are starting to get it, “there is a lack of confidence globally that these problems can be addressed by policy makers”.

    BINGO! Give the man a prize! That’s exactly it! It’s not that the problem we face can’t be managed. It’s that they THEM in DC are incapable of doing it!!!

    Lead! Follow! Or Get Out of the Way! – Lee Iacocca


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