Tags: US | Government | debt | 18 trillion

US Government Debt Tops $18 Trillion

By    |   Tuesday, 02 December 2014 02:10 PM

The federal government's debt has surpassed the $18 trillion mark for the first time, standing at 103 percent of GDP.

The debt has risen from $10.6 trillion when President Obama entered office, and some conservative commentators put the blame on him.

"The debt has increased by 70 percent during his abysmally incompetent administration," writes commercial litigator John Hinderaker on Powerlineblog.

"Put another way, 41 percent of the national debt of the United States, from George Washington to the present, has accrued during the Obama administration. And we have two years yet to go."

Coverage of the ever-increasing debt seems to have subsided. "Chronic underemployment, wage stagnation, foreign policy debacles and various administration scandals have pushed it out of the headlines."

"Total U.S. debt to nominal GDP as of Sept 30, which was $17.555 trillion, is now 103 percent. Keep in mind this GDP number was artificially increased by about half a trillion dollars a year ago thanks to the 'benefit' of R&D and intangibles. Without said definitional change, debt/GDP would now be about 106 percent," Tyler Durden of ZeroHedge.com wrote.

Meanwhile, Chris Matthews of Fortune points out that the debt and the budget deficit played little role in the mid-term elections.

The budget deficit has shrunk to 3 percent of GDP from 10 percent five years ago. The Congressional Budget Office expects the deficit to bottom next year and then gradually rise.

"So what does this mean for the economy?" Matthews writes. "In the short run, it's all positive." That's because most of the budget deficit's shrinkage this year has stemmed from faster economic growth.

As for the long term, Sullivan points to commentary written by Jim O'Sullivan, chief U.S. economist at High Frequency Economics.

"The trend [for the deficit] will be up again as the population continues to age and retirement and healthcare costs grow," O'Sullivan writes.

"Similarly, the debt-to-GDP ratio will start moving up again within a few years. However, that is for another time and another presidency. For now the budget deficit appears to have become a non-issue for financial markets," O'Sullivan adds.

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The federal government's debt has surpassed the $18 trillion mark for the first time, standing at 103 percent of GDP.
US, Government, debt, 18 trillion
Tuesday, 02 December 2014 02:10 PM
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