In Febuary, I predicted that US federal debt would exceed US GDP by 2015. It appears that I was too optimistic at that time.
The Obama Administration’s latest budget projections now show that the debt may exceed GDP as soon as 2010! This year’s deficit is expected to rise to $1.75 Trillion, raising the total debt from the current 11.2 trillion (4/9/09) to almost 13 trillion by year end. Next year’s deficit is projected to be in the trillion dollar range, driving the debt up to 14 trillion [1], which is roughly equivalent to 2008 GDP. Since GDP growth will be negative in 2009 and modest in 2010, it’s not unlikely that GDP and gross federal debt will be equal at the end of 2010 [2].
It looks like the budget situation may force decisions on big government programs like Medicare, Social Security, and Defense sooner than most expected – and likely sooner than the Administration would prefer. Here’s to the return (or beginning?) of fiscal discipline!
[1] See Table S-9 in the White House Budget for FY 2010, showing gross debt of 14.078 Trillion for 2010.
[2] Table S-8 shows the White House’s economic growth assumptions, which are more optimistic than many mainstream economists’ assumptions. In fact, the table itself shows that both the CBO and private economists have lower growth projections than the White House (kudos for the honesty). The CBO estimates GDP at 14.6 Trillion for 2010, meaning that any further slippage in the budget cause the debt to surpass GDP.
How Much Would Universal Healthcare Cost? « True Cost – Analyzing our economy, government policy, and society through the lens of cost-benefit said
[...] Americans really cost? Critics maintain that covering all Americans would break the US budget (which is already overstretched), while advocates maintain that covering all Americans can be done affordably. But how much would [...]
US Debt to exceed GDP by 2015 « True Cost – Analyzing our economy, government policy, and society through the lens of cost-benefit said
[...] February 11, 2009 at 4:06 pm · Filed under Economics, General, Policy ·Tagged debt ratio, debt to gdp, deficit, federal debt, us deficit Here’s a more recent post – the US Debt is now likely to exceed GDP by 2010, next year! [...]
Medicare Bankrupt in 6-8 Years Without Rationing « True Cost – Analyzing our economy, government policy, and society through the lens of cost-benefit said
[...] growth through borrowing. That route will almost certainly be unavailable this time, as US government debt will exceed GDP by next year, and could be over 120% of GDP by 2017. Raising taxes will be difficult as well, since tax revenues [...]
How Much Should the US Spend on Defense? « True Cost – Analyzing our economy, government policy, and society through the lens of cost-benefit said
[...] the US begins to contemplate fiscal discipline (as lenders slowly run out), cutting the military budget will be unavoidable. Gradually cutting $200B annually from the US [...]