This week’s CBTV show is entitled, “Unhealthy State of the Union: Our National Debt is Now Growing Faster Than the Economy.”
For the first time since World War II, our national debt has reached the same level as the total production value of the country’s economy. In other words, the national debt, which is the amount of money the country owes to its creditors, combined with IOUs to government retirement programs and other initiatives, now tops $15.23 trillion. This now equals the value of all goods and services the U.S. economy produces in one year’s time. With the debt ceiling expected to rise by another $1.2 trillion dollars sometime this month, the national debt will officially surpass the country’s annual economic output.
The ratio of U.S. debt to GDP has now officially hit 100%, and it’s rising. The last time the ratio of national debt to Gross Domestic Product topped 100%, was just after World War II. GDP measures the market value of all goods and services produced within a country during a specific time period, usually on a quarterly or annual basis. National debt is defined as the total amount of debt owed by a country, both internally, as well as externally to foreign lenders. The ratio of national debt to GDP reached 121% in 1946, one year after WW II ended. That is the highest ratio in U.S. history and understandably so. The U.S. spent an estimated $341 billion dollars fighting World War II, and the U.S. GDP didn’t top that figure until 1952. After the war was paid for, the national debt to GDP ratio decreased incrementally over the next 35 years, falling to just 32% of GDP by 1981.
When the debt ceiling rises to $16.4 trillion dollars this month, more borrowing and spending is expected to continue through the rest of 2012. In fact, the Congressional Budget Office (CBO) has already estimated the government will run at a deficit of $973 billion dollars for Fiscal Year 2012, which started on October 1st of 2011. That number will top $1 trillion dollars for the fourth year in a row, if the payroll tax cut and emergency unemployment benefits are “extended” for the rest of the year, as expected. What’s worse is that President Obama’s 2012 budget projects U.S. debt rising above $26 trillion dollars in just a decade from now, making this alarming trend of debt growing faster than the economy a real concern for all of us who live in this country.
Just how bad is the state of the U.S. national debt? It’s so bad that every working American would need to give up one year’s salary to pay it off! Some have argued that raising taxes is the easy solution, but who wants to pay more in taxes to fund the governments continued spending. Taxes at the end of WWII were increased to pay for the cost of defending the U.S., which was a noble cause, and one that most Americans supported. But in today’s scenario, the money the government spends seems to be out of control with no accountability. Take for example how it funds companies such as solar-panel manufacturer Solyndra for half a billion dollars, only to have the company file bankruptcy a short time later. No matter how much money Americans pay in taxes to our government, our elected officials are still the ones who are making the important decisions on what to spend our money on. They need to wake up, and decide on a plan to significantly cut spending and start digging us out of this seemingly bottomless pit, before it’s too late!
Again, I’d like to hear from you on this important topic that can ultimately affect all of us, as well as our children and grandchildren. Are you concerned about our national debt increasing by leaps and bounds or do you think it’s no big deal? Until next week, Dump Debt, Invest Wisely, Believe in Yourself and Make it Happen!
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