Debt Could Ruin US Economy

Monday, 31 Jan 2011 08:08 AM

By Doug Wead

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Here is a list of U.S. debt facts and a timeline that every American should have nearby. It may help you plan.

The 2001 projected U.S. budget for 2009-2012 was plus $850 billion per year. The projections now: minus $1.2 trillion a year.

Here are the eye-opening stats:
  • U.S. national debt: $14 trillion
  • U.S. gross domestic product: $14.9 trillion
  • World GDP: 61.9 trillion
  • National debt as a percent of GDP in 1980: 26.1 percent
  • National debt as a percent of GDP last year: 62.2 percent
  • U.S. deficit 2009: $1.75 trillion
  • U.S. deficit to GDP ratio: 11.8 percent
  • Greece deficit to GDP ratio: 12.7 percent
  • Ratio required to join European Union: less than 3 percent
  • All 2009 U.S. tax revenues: $2.1 trillion
  • Net worth of the U.S. and all its citizens in 2009: $54.2 trillion

A nation must have a deficit to GDP ratio of less than 3 percent to join the European Union. For example, Hungary is receiving great criticism for failing to raise taxes and is finding it difficult to meet a 3.8 percent target imposed by the Union.

Greece is out of control, its economy on the brink, hitting 12.7 percent deficit to GDP ratio. And the United States? By current standards we couldn’t even get into the Union. We are not far behind Greece, posting an 11.8 percent ratio of deficit to GDP. If Greece is going into the abyss, we may follow.

Now keep in the mind the following. The United States has unfunded liabilities of $107 billion for Medicare and Social Security. Liabilities for Medicaid are unknown. Liabilities for federal pensions are not fully known. In 2013 more than 78 million baby boomers will be able to collect Social Security without income limitation.

The first year that they are eligible for Medicare is upon us now, 2011. They are signing up at the rate of 10,000 a day.

The Democrats and Republicans have been playing a game of musical chairs right up to the end. Each is betting or hoping that they will be seated when the music stops playing and the other will be left standing and blamed by the public for the disaster.

The fact is that they are both to blame. The end game is not far off now.

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