Tags: Treasury | US | Borrowing | GDP

Treasury: US Borrowing Tops 100% of GDP

Thursday, 04 Aug 2011 03:40 PM

The federal government's gross debt has reached 100 percent of gross domestic product following the debt ceiling deal, reports AFP, citing Treasury Department figures.

New borrowing this week increased total federal debt to $14.58 trillion, surpassing the nation's gross domestic product figure of $14.53 reported at the end of 2010, according to the AFP.

The Treasury Department added $200 billion in commitments right after President Barack Obama signed the agreement raising the debt ceiling on Tuesday.

The government had removed those liabilities from its balance sheet in May when it reached its $14.29 trillion cap, the AFP noted.

Since then the Treasury Department used "extraordinary measures" to stay under the limit while Congress wrangled over increasing the cap.

The budget deal increased the debt limit by $200 billion on Tuesday, and then will increase it in stages in the coming 18 months. The deal increases the debt ceiling by $2 trillion and calls for Congress to cut
spending by $2.5 trillion over 10 years.

The U.S. hasn't had more debt than GDP since 1947 after the end of WWII.

The U.S. now joins a small group of countries with public debt surpassing their GDP. They include Japan, Jamaica, Lebanon, Iceland, Greece, Italy, and Ireland, according to AFP, citing numbers from the International Monetary Fund. Large public debts in European countries — most notably Greece which as public debt at 152 percent of its GDP — have threatened economic stability in Europe.

China, Uncle Sam's largest lender, is warning Washington that it must get control over its debt.

The U.S. must "take responsible policy measures to handle its debt," stated People's Bank of China Governor Zhou Xiaochuan in comments posted in the bank's website, USA Today reported.

"Large fluctuations and uncertainties in (the Treasury) market would undermine the stability of the international financial system and hinder global recovery."

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