Friday, November 5, 2010

Digging a big hole even deeper

The cost of doing nothing for two years

What would happen to U.S. debt levels if fiscal policy simply stays on its current course for the next two to three years? Today, the federal debt held by the public totals around $9 trillion, or 62% of GDP, versus $5.8 trillion in 2008. In an August report "The Budget and Economic Outlook: An Update," the Congressional Budget Office provided data that projects deficits over the next several years. Using those numbers, the CBO projects that that deficits will total $3.5 trillion between fiscal 2011 and 2013. That would raise total borrowings by 39% and swell debt to GDP to around 76%., bringing America into the danger zone. America would then face one of two outcomes, both of them reminiscent of what Ireland, Greece and Argentina have suffered in the last several years.

Posted by mark @ 01:30 PM (966 views)
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One thought on “Digging a big hole even deeper

  • Good find, mark

    This is the first article I’ve read that in the mainstream press (or anywhere else for that matter) suggesting that austerity measures are the way forward for the U.S.

    Also, I didn’t know until now that there is no VAT in the States (I’ve lived a sheltered life).

    A new 20% tax for the U.S. is just what the doctor ordered. Not.

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