US debt tops 13 trillion US dollars for first time

[aimarraul]

US debt tops 13 trillion dollars for first time
ANDREW BEATTY
June 3, 2010

AFP - US debt has reached 13 trillion dollars for the first time in history, the Treasury Department said Wednesday, stoking a political furor over government spending.

Amid vast government outlays designed to end the economic crisis, the debt reached a record 13,050,826,460,886.97 dollars on June 1, according to official figures.

The debt has increased by around 1.6 trillion dollars in the last year and more than doubled in the last 10 years. It now stands at just under 90 percent of annual gross domestic product.

Against this stark backdrop, tackling debt has become a hot political issue in Washington, with Democrats and Republicans trading barbs about who is to blame.

Earlier on Wednesday President Obama assailed Republicans for leaving him with the type of spiraling short-term deficits that fuel longer-term debt.

The US government suffered its 19th consecutive month of budget deficit in April.

"By the time I took office, we had a one-year deficit of over one trillion dollars and projected deficits of eight trillion dollars over the next decade. Most of this was the result of not paying for two major tax cuts skewed to the wealthy, and a worthy but expensive prescription drug program that wasn't paid for," Obama told an audience in Pittsburgh, Pennsylvania.

"I always find it interesting that the same people who participated in these decisions are the ones who now charge our administration with fiscal irresponsibility.

"Despite all their current moralizing about the need to curb spending, this is the same crowd who took the record 237 billion dollar surplus that president Clinton left them and turned it into a record 1.3 trillion dollar deficit."

But Republicans have lambasted Obama for expanding government spending since he came to office through a massive reform of healthcare.

"Thirteen is certainly an unlucky number, especially for our children and grandchildren who will be left to dig out of trillions of dollars worth of debt," said Republican Senator Judd Gregg, a frequent critic of Obama's budget policies.

"This dangerous and unsustainable level of debt cannot continue without bankrupting our country, and I urge the majority to slow its explosion of spending and borrowing before it is too late."

But economists are sharply divided over how quickly the US should move to rein in spending.

Some believe that a rapid tightening of government expenditure, or an increase in taxes could remove the one support that is keeping the United States from falling deeper into recession.

But as debt-contagion fears grip Europe others have warned that the United States has limited time to forge a credible plan to end its own fiscal woes.

Even the normally cautious Federal Reserve Chairman Ben Bernanke has warned that politically painful tax hikes or spending cuts could be needed to balance the budget.

Obama has launched a bipartisan debt commission to investigate ways of tackling the problem. It is expected to produce its findings by the end of the year.

 

[Archie]

An advice to Obama
Get out of Iraq and Afganistan as quickly as possible and i can guarantee that the budget deficit will fall by 5 trillion over the next 10 yrs

US cannot afford another Viatnam or worst a double edged recession

 

[Nahraf]

The US debt clock which keeps track to debt by different levels of US government.

U.S. National Debt Clock : Real Time

 

[xenia]

13,050,826,460,886.97 dollars

i am loving this figure
time for US to get a dose of pragmatism!

 

[xuxu1457]

I find that we have a same view on this figure~~
and the number increase 20000$/second
http://www.usdebtclock.org/#

 

[Fighter488]

Forget PIIGS, US Debt Is Out of Control

By Robert Barone Jun 04, 2010 10:00 am

The numbers are almost unimaginable, and unless they're addressed soon, depreciation of the dollar looms.



Editor's Note: This article was written by Robert Barone, head of Ancora West. Barone currently serves on AAA’s Finance and Investment Committee, which oversees $5 billion of investable assets. This column was originally posted on AncoraWest's Market Insights.


The markets are in turmoil because of worry about the so-called PIIGS (Portugal, Ireland, Italy, Greece, and Spain) debts. In Fiscal Crises: The Next Shoe, I opined that Greece is just the canary in the coal mine and that when we look homeward, we have our own huge debt issues, which aren't significantly different from those of the PIIGS countries. I believe that the only reason the European contagion hasn't yet spread to America is because of the dollar’s status as the world’s reserve currency. That era is coming to an end, and it would behoove America to get its house in order.

A May 14, 2010 Barron’s piece entitled We’re Not Greece -- Yet (D. Henniger) referred to a Royal Bank of Canada (RY) study that concluded that “Although the states of California, New York, New Jersey, Massachusetts, and Illinois are comparable in terms of economic output and population to Portugal, Ireland, Italy, Greece, and Spain, RBC finds that states’ debt burden are nowhere near that of the PIIGS.” This, “even after including unfunded liabilities for states’ employees’ pension and other benefits.” As you'll see below, I take issue with the above conclusion, and the first half of this piece will deal with why. Basically, citizens of each US state are responsible not only for the debt burdens of their states and localities, but they're also responsible for their proportionate share of the federal debt. As you'll see, the combination of the two produces debt ratios far in excess of those of the PIIGS.

Table 1 shows the PIIGS data that the markets are concerned with.

Table 1
http://img412.imageshack.us/i/barone641.jpg/


Table 2 shows estimates (for fiscal year 2010) of the Population (1), State GDP (2), State Debt/State GDP (3), Local Debt/State GDP (4), Unfunded Pension/State GDP (5), Other Unfunded Benefits/State GDP (6), Total Debt/State GDP (7), and Per Capita Debt (8) for the states mentioned in the Barron’s piece plus Michigan.

Table 2
http://img44.imageshack.us/i/barone642.jpg/


Using California as an example, the population is rapidly approaching 40 million, the state’s GDP is estimated at $1.87 trillion, the State Government Debt/State GDP is 7.4%, Local Government Debt/State GDP is 17.2%, Unfunded State Worker Pension Liability/State GDP is 27.8%, Unfunded Other Health and Benefit Liabilities/State GDP is 3.3% for a Total Debt/State GDP of 55.7%. Translating this into Debt Per Capita reveals that every California citizen owes $26,000 for debt or liabilities contracted by their elected officials. Looking back at Table 1, this isn’t too different than the Debt/GDP ratio of Spain. And looking down the Total Debt/State GDP column of Table 2, it becomes apparent that both New Jersey and Illinois have Debt/GDP ratios equivalent to that of Spain.

But wait! Citizens of the states in the US are also responsible for the debt piled up in Washington, DC. So, to the debt of the states and localities, one must add the national debt. The first three rows of Table 3 show an average of all State (row 1), Local (row 2), and Federal (row 3) Debt/GDP and the Per Capita dollars owed by each US citizen.

Table 3
http://img710.imageshack.us/i/barone643.jpg/

Uploaded with ImageShack.us


Using the table, look at the intersection of the "Cumulative (%)" column and "+Agency" row, which represents the recognized public debt of the federal government and its agencies and an average state and local burden. One can see that at 134.6% of GDP, debt burdens are higher than those of all of the PIIGS countries that have given the markets so much heartburn. Table 4 substitutes the debts of the states shown in Table 2 for the "Average State" and "Average Local" and shows the indebtedness of the citizens of these states per capita and as percentages of both State and US GDPs. All of the states shown have Debt/GDP ratios significantly higher than that of Greece.

Table 4
http://img231.imageshack.us/i/barone644.jpg/


Now, I'm not an expert on debt levels in European countries. And, it could well be that citizens of those countries have taken on public debt that would be similar to US State and Local debt that isn't in the figures shown in Table 1. But, because the absolute levels of the Debt/GDP shown for the PIIGS have been a cause for concern, then the debts of the citizens of the US, and, specifically those states shown in Table 4, should also be cause for grave concern. For the most part, the European states are at least considering austerity measures. And while some US states are being forced into austerity because of their inability to print money, the major contributor to the indebtedness, the US Congress, doesn't seem all that concerned. This is a major difference from what's occurring in Europe.

So far in this piece I've only talked about public debt. Usdebtclock.org estimates total personal debt at $16.6 trillion, mortgage debt at $14.1 trillion, consumer debt at $2.5 trillion, and credit card debt at $848 billion. (Amazingly, of the four types of private debt, only consumer debt is shown at usdebtclock.org as expanding; the other three categories of consumer debt are contracting. I wish I could say the same about public debt!) So, on top of all of the public debt, each US citizen, on average, owes privately $53,525. Adding the public and private debt together totals $117,181 per capita, or a total Debt/GDP ratio of 248% (see Table 3). Wow! Now that's a lot of debt!

Finally, the unfunded liabilities of Social Security and Medicare are nearly $109 trillion, or about $352,000 per US citizen (see usdebtclock.org). That number alone is a Debt/GDP ratio of 745% and is so outside the realm of rationality that I didn't bother to put it in the table. Clearly, the recipients of these promises can't possibly hope to receive such benefits in current dollars. Depreciation of the currency or significant cutbacks in the promises (or both) is inevitable. The recognition of the real magnitude of these irresponsible promises should be enough to cause a loss of confidence in the dollar. In my view, unless the US moves to at least begin to address these issues, that day is closer than anyone might think.

All of the public debt was originated by governments and most of the private debt by banks or other financial institutions. In feudal times, serfs owed a significant portion of their toil to their lords. Have times really changed? The lords are now the politicians and "Too Big to Fail" bankers. Many ordinary people are serfs, highly indebted either voluntarily (private debt) or involuntarily (public debt). Looking at debt in this way helps to explain the unholy alliance between Washington and Wall Street (see The Unholy Washington-Wall Street Alliance) and why the "Too Big to Fail" and Washington politicians get richer and richer at the public's expense.

While US citizens are drowning in debt, the political system appears incapable of reducing it. In fact, the politicians continue to expand it in the erroneous belief that more debt will help. There are only two ways out: years of austerity or currency devaluation/inflation. The political system won't allow the former. Buy Gold!

Forget PIIGS, US Debt Is Out of Control | Markets | Minyanville.com

 

[Fighter488]

Why U.S. debt matters to you​

By Jeanne Sahadi, senior writer
June 3, 2010: 11:38 AM ET


NEW YORK (CNNMoney.com) -- Letting U.S. debt grow unabated is often framed as an unforgivable burden to heap on one's grandchildren.

But there are plenty of reasons today's parents might be concerned for themselves and their kids.

If Congress doesn't craft a plan to address long-term fiscal shortfalls after the economy recovers, potential problems could arise sooner rather than later, debt experts say.

Slower economic growth: After examining data from dozens of countries over the past two centuries, economists Carmen Reinhart and Kenneth Rogoff found a connection between high debt and reduced economic growth. Specifically, they found that when a nation's gross debt reaches 90% of its economy, it often loses about one percentage point of growth a year.

U.S. gross debt -- currently $13 trillion -- will hit the 90% threshold this year. Gross debt includes money owed to those who hold U.S. bonds and money owed to government trust funds such as Social Security.


0:00 /2:24Why U.S. debt matters to you
Reinhart has said the relationship between high debt and low growth is "self-feeding." Low growth ravishes government revenue and increases the need to borrow. More borrowing builds debt. Higher debt increases pressure to tighten fiscal policies in order to reduce the risk that investors lose confidence in the country. But tighter policies can slow economic growth.

One percentage point lower growth may not seem huge. But it's equal to roughly a third of the average annual GDP forecast over the next decade.

And slower growth can reduce the number of jobs created, which in turn can hold down household incomes.

High interest payments: Interest rates are still very low and may continue to be as the debt crisis in Europe makes the United States a more attractive safe haven for investors.

That means the government can borrow on the cheap right now. But rates will rise as the world economy recovers. By 2020, annual interest owed on U.S. debt will approach $1 trillion, or roughly 21% of projected federal revenue for that year, according to Congressional Budget Office estimates.

Interest rates may rise further than expected if credit rating agencies or investors start to doubt U.S. resolve to rein in the growth in debt. And that would jack up the cost of borrowing for businesses and consumers.

Ironically, some debt experts would almost prefer that rates rise so there will be more urgency to deal with the debt situation. It might hurt, but not as much as if rates stay very low for a long time -- planting the seeds for the next credit bubble and bust when U.S. debt levels are that much higher.

Less government support: The more debt the government accrues, the more it will pay in interest and the less it will have to spend on the basic services Americans expect from their government.

Spending for everything from education to infrastructure and defense could be compromised. And, many argue, not being able to make strategic investments in these areas can weaken the country competitively.

Also, the government will be hamstrung in responding to emergencies such as natural or man-made disasters, terrorist attacks or future economic downturns.

Inflation: There don't appear to be any official signs of inflation brewing today. But throughout U.S. history, high levels of debt have usually brought high rates of inflation, Reinhart and Rogoff found.

Some economists -- including Kansas City Federal Reserve Bank President Thomas Hoenig -- have said they are concerned about what could happen if the United States faces a debt crisis. In such a case, the Federal Reserve may cave to political pressure to let inflation rise, which reduces the real value of the country's debt but also devalues people's savings and income.

Harsh choices: No one can say when or even if a debt crisis will occur. But lawmakers will tempt fate if they wait too long to address the imbalances on the U.S. balance sheet, fiscal experts say.

Fiscal experts believe it's entirely possible that, absent action, the United States would experience a debt crisis within the next 10 to 20 years.

"Most believe it would happen much sooner than 20 years," said Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget. Many believe it could happen within the next five to 10 years, she said.​

And waiting too long would force lawmakers to make much more draconian and abrupt changes than they would otherwise.

Experts are increasingly convinced that Congress won't act until a true crisis is on the U.S. doorstep -- for two reasons. The first is the sharp partisan divide. The second is that no politician likes to run on promises to implement difficult and unpopular measures.

So until there's sufficient public support for debt reduction, don't expect to see much political will for it.

"Like the proverbial frog that fails to jump out of the soup pot as the temperature slowly rises, Americans seem terrifyingly unwilling to act until the pain of debt can no longer be ignored," Syracuse University professor Len Burman wrote in a recent essay. "As the frog learns in its final moments, by then, it's too late."​

Forget the grandkids, U.S. debt could hurt you - Jun. 3, 2010

 

[Fighter488]

U.S. Sen. Grassley: $13 trillion of debt
6/4/2010

Q & A: $13 trillion of debt

Q. What does government spending that adds to the deficit and debt mean for the average American?

A. According to the Treasury Department, our total national debt now tops $13 trillion. That is $42,000 for each of the 309 million people living in the United States. Since President Obama took office, the national debt has increased at a rate of nearly $5 billion per day. That’s almost three times the rate during the prior administration. By next year, the national debt is projected to reach nearly 100 percent of U.S. Gross Domestic Product (our national economic output). That’s the highest level since the end of World War II.

Big spenders in the political arena have exploited the economic recession to call for more government spending, higher taxes and new entitlements, from health care to federal student loans.

Squeezing out the private sector by growing the government is anti-consumer, anti-entrepreneur, anti-small business and anti-taxpayer.

But the biggest loser in this spending binge is the next generation.

Our children and grandchildren will be saddled with a legacy of debt fed by unfunded and unsustainable liabilities. Federal spending now represents one-quarter of our economy. If Washington continues to accelerate federal spending, the cost to future generations is clear: bigger chunks of their earnings will be taxed just to pay interest on the national debt. Escalating deficits and debt will lead to a lower standard of living.

Q. How is the national debt financed?

A. Of the present-day $13 trillion national debt, approximately $8.5 trillion is debt held by the public, and approximately $4.5 trillion is debt held by various government trust funds.

The amount of debt held by the public is determined by the government’s annual cash-flow. When total spending exceeds total taxes, the government has a budget deficit. To finance this deficit, the government borrows from the public by selling debt, such as Treasury bills, notes, and bonds. About 53 percent is held by U.S. investors, while foreign investors hold 47 percent. Among foreign investors, China is the largest at 11 percent.

In addition to the debt held by the public, the federal debt includes debt held by various government trust funds, such as Social Security and Medicare.

Whenever a trust fund program collects more than it spends, the surplus is invested in Treasury securities. These securities earn interest which is credited to the trust funds by issuing additional securities. It’s important to understand the amount of debt held by the trust funds does not reflect the government’s future obligations. For example, the Treasury Department reports that the total amount of debt held by all of the trust funds is about $4.5 trillion. However, the Social Security and Medicare Trustees report that the unfunded obligation of Social Security and Medicare, over the next 75 years, is almost $46 trillion, although there is a considerable degree of uncertainty surrounding these long-term projections.


IowaPolitics.com: U.S. Sen. Grassley: $13 trillion of debt

 

[no_name]

The US debt clock which keeps track to debt by different levels of US government.

U.S. National Debt Clock : Real Time

The figures look more alive presented this way. Otherwise there is a sense of remoteness to it.

 

[mistehbab]

Assalam-o-Alaikum-Warahmat-ULLAH ALL,

What fool thinks US debt is $13 trillion ? Its far far higher than that;

(1) Since US Govt. nationalized some banks, some corporations, their debt has gone far far upward. Look at 'Fannie Mae' and 'Freddie Mac'. They added some trillions as per Wikipedia

(2) $202 trillion of debt according to Bloomberg article;

- Bloomberg: U.S. Is Bankrupt and We Don't Even Know It: Laurence Kotlikoff

(3) Then there is $750 trillion of CDOs (Collateralized debt obligations) shoved in on USA, by 'these' bankers, these 'people' of 'finance' 'industry'

According to some people, entire global economy being generated today is $50 trillion at maximum.

(4) $1.5 quadrillion ($1500 trillion) of debt they owe to international bankers

I think this is because of the housing bubble. More of that in the video

Who are these bankers ? They are Zionists/Unjust Jews based in Europe. Check this out;

- Youtube Video:

and

(5) there is still a lot of debt that is 'off-balance-sheet' to-date

(6) Search Google for more on it

Which means debt that hasn't been 'disclosed' yet.

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So, who is the (sarcam) Pakistani genious (/sarcam) who thinks USA only has a $13 trillion debt ?

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Have you guys seen the OECD figures for Debt-to-GDP ratios in 2009 ? Its as follows;



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For all those who have watched TV series: StarTrek, the Zionists/Unjust Jew bankers and their allies are 'using' 'Christians' and now 'private contractors' of multiple nationalities, as 'cannon fodder' (as 'The Borg') against us/Muslims.

 

[KS]

I have heard that the US can write off its debts anytime it wants because the majority of the world trading is carried out in Dollars and more importantly almost all the major oil producers deal only in Dollars and so the US can simply print more money and need not have the gold worth as all other countries do.

Is it true?

 

[SandsofTime]

I have heard that the US can write off its debts anytime it wants because the majority of the world trading is carried out in Dollars and more importantly almost all the major oil producers deal only in Dollars and so the US can simply print more money and need not have the gold worth as all other countries do.

Is it true?

Only partly. Currency by itself doesn't mean anything. In economics, it is the labor put behind earning that currency and the purchasing power of the currency (how much wheat a unit of currency purchases, for example) that matters. Printing the dollar and flooding the market with liquidity reduces the real value of the dollar. Many nations who have large dollar reserves and treasury bonds not protected by inflation will stand to loose a lot of money. Basically, the US would be financing its debt by stealing the hard earned wealth of other nations. Those nations would be damn pissed by any such action. They would then collaborate to remove the dollar as the world reserve currency. That would be the end of dollar hegemony. Investors would dump the US and move their capital to other nations where they can have more earning potential and where the value of their earnings remains stable.

If US were to undertake this option in a drastic manner it would mean it has decided to forgo its position as the dominant and leading economy. Precisely for this reason no such drastic action is to be seen, but infact behind the scenes the US is doing something similar on a smaller scale. The term "Quantitative Easing" is a euphemism for generating liquidity in the market by printing money. It is supposed to help the US economy by increasing the availability of credit. As a side effect of the process, US debt is getting monetized (read funded by others). This is one of the reasons why dollar is falling against other currencies. There is a lot of tension generated these days by these FED policies, as other nations want to protect their interests too. Ultimately this is leading to a slow decline of the dollar and its eventual replacement by an international currency more acceptable to all.

 

[mistehbab]

Assalam-o-Alaikum-Warahmat-ULLAH ALL,

Why is the entire world dumping the dollar ? Why is the world rushing for 'gold' ?

One reason is because people (Zionists/Unjust Jews) 'manipulate' 'financial system' in USA, 'maneuver' its inner-workings to 'loot' all of the world from their hard earned money right from their pockets.

When money is in shape of gold, its 'worth' remains 'constant'. That means, it cannot be 'stolen', as it is being stolen right now.

They devalue are money, loot our hard earned money, and there is no revolution in the world against them (i.e., the people who are looting money of the people of most of the world who use 'paper currency'). (sarcasm) Isn't this great ? (/sarcasm)

Go through the videos on Youtube Channels;

(1) EconomyMeltdown
(2) geraldcelente

for much much more on this.

 

[mistehbab]

Assalam-o-Alaikum-Warahmat-ULLAH / Hello ALL,

@Karthic Sri: No US can't. They may be able to write off their 'local debt' in some way. Even that is not an assurity. Yet US owes all or much of this 'debt' money to 'international bankers' who are based in Europe. These bankers are 'Zionists, Unjust Jews'. They have their own agenda (i.e., ruling over the world, 'world government', and having AntiChrist as their leader).

That is why 'they' 'finance' 'both' 'sides' of 'every' 'military' 'conflict', 'every' 'war'. Its called applying 'pressure' from 'top' (Musharraf/Zardari) and 'bottom' (TTP). Check this out;

[video=google;6260646431723948415]http://video.google.com/videoplay?docid=6260646431723948415"[/video]

 

[mistehbab]

Assalam-o-Alaikum-Warahmat-ULLAH ALL,

TheEconomic Collapse Article: 11 Long-Term Trends That Are Absolutely Destroying The U.S. Economy

Correction: The 'derivatives' bubble in USA is causing $1.5 quadrillion of 'debt' and this amount is still rising. This article gives details.

This is for all, especially Pakistanis' who don't know or are not aware of reality.