Federal Government Debt Thermometer
Kurt Brouwer June 21st, 2007
One of my favorite economics blogs it The Skeptical Optimist, run by Steve Conover. He has been able to take somewhat arcane economic issues such as the level of Federal government debt and make them both accessible and interesting.
The next time you hear about the ‘crushing’ level of government debt it is useful to actually find out how much the Feds owe. Here is his international debt thermometer:
‘It’s been a year since I posted this snapshot of how various countries rank on the debt scale, according to the CIA World Factbook, so it’s time for a refresh.
This is usually a pleasant surprise to anyone who’s been hearing about the USA’s “crushing” debt burden from people who don’t place it into proper context. And it’s usually an unpleasant surprise to those who like to use fear of debt as a political lever, and therefore intentionally refrain from placing into context.
Although the USA’s “total” national debt is 66.3% GDP (see note 1 on the graphic; it’s based on the “$9 trillion debt” that always appears in the headlines), the more important number is the publicly held debt level of 37.5% GDP (see note 2), for reasons I’ve explained many times at this blog.
After WW-2, publicly held debt was 121% GDP; although the debt level has increased many times over since then, the debt ratio has dropped to 37.5% because of sixty years of economic growth.
One of the key issues he points out is that much of our government debt is owed to itself, that is to Social Security or other government agencies. The remainder that is owned by investors is a modest 37.5%.
We all know that future obligations for Social Security, Medicare and other unfunded or partially funded liabilities will grow over the next 75 years. Skeptical Optimist has some interesting and provocative posts on those issues here and here.
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