At the close of business on Tuesday, the US National Debt was $15,033,607,255,920.32 - crossing the $15 Trillion threshold earlier in the day. To put this number in perspective, according to the Department of Commerce's Bureau of Economic Analysis, the total dollar value of the US Gross Domestic Product as calculated for the 3rd Quarter of 2011, is $15,198,600,000,000 or $15.199 Trillion.
GDP is the "total market value of all final goods and services produced in a country in a given year, equal to total consumer, investment and government spending, plus the value of exports, minus the value of imports."
One of the key indicators of the financial challenges of the many of the European countries is their level of Debt to GDP - with Greece currently about 145%, Italy at about 120%. With these numbers, the US is effectively at a major warning threshold with the ratio at virtually 100%.
In the 1029 days that President Obama has been President, less than a full 4 year term, he has contributed over $4.407 trillion to this total. This is only about $500 billion less than was added to the National Debt during the 8 year term of President Bush (43) who inherited a $5.7 trillion National Debt. With 431 days left in his full term, it is certain, given the current budget crisis and spending / deficit levels, that President Obama will add far more to the National Debt in 4 years than Bush did in 8.
Against this backdrop, considerable attention in Washington DC is directed towards the action or inaction of the Congressional Supercommittee to define $1.2 trillion of spending cuts over the next decade in an effort to, not halt, but, slow (?) the pace of Federal Government deficit spending. With their deadline rapidly approaching, the Supercommittee, despite an annual budget deficit of over $1.4 trillion, cannot find an average of $120 billion to cut each year over the next 10 years.
The non-partisan Congressional Budget Office is currently projecting that the US National Debt will reach $17.6 trillion in 2015, while Debtclock.org is projecting that the debt will be approximately $23 trillion in 2015. This is a reflection of the continuation of the current out of control spending that the Federal Government is currently embarked on.
Despite the comments of far too many politicians, Federal tax revenues, while down because of the 2008 recession and anemic recovery, are not the problem. Irresponsible spending by the Federal Government at unprecedented levels are the direct cause of the massive deficits we currently have (@ $1.5 trillion under Obama). In 2008's Federal Budget, the US Government spent $2.9 trillion. In the current 2011 continuing resolution that authorized FY2011 spending, the US Government spent $3.82 trillion. Our spending has increased nearly $1 trillion in just these 4 years!
Many elements of the Federal Government's Executive Branch bureaucracies have benefited from huge increases in spending and staffing over the last 4 years - matching or exceeding their increased responsibilities to define and control actions throughout the US. The compensation of many Federal workers has also increased significantly, to the point where Government employees have compensation levels 25% higher than their private sector counterparts.
Let's look back at the projections for 2015. The CBO, which does not have a stellar track record on their projections of spending and costs, projects that the Debt to GDP ration would be in the 110-115%. If we use the more pessimistic (we should - see my note at the bottom of the post) Debtclock.org projections, we're talking about a ratio of around 145% in 2015. That means, simply, we will be in a similar situation that Greece finds itself in today, in just over 3 years from now!!
It is beyond imperative that we take decisive action as soon as possible to stop our race at 1,500 mph down the current path to fiscal catastrophe. Even if the Supercommittee takes actions, the effects are so meaningless that they can easily be termed as purely symbolic - and our speed down that road continues at 1,450 mph. If a 'Bold' solution of $4T in cuts combined with $1T or more in tax increases are done - even if we ignore the negative effects the tax increases will have on the economy or the effects of the Laffer Curve, we're still flying down that road at 750 mph.
We need to take the fiscally responsible actions today to drastically redefine our spending. This means returning to a limited government - and focusing on making that limited government more efficient in its operation. This is 180 degrees from the direction we are on today as established by not only the progressive Obama Administration, but also by many members of the GOP establishment.
(Note - one of the items that these projections have challenges measuring is the effects of Obamacare - which will, as other major entitlement programs do, cost us far more to operate, administer, and fund than was projected. Organizations like the Heritage Foundation estimated that Obamacare would cost us $2.4T between 2012 and 2022 - far higher than the projections of the CBO and the Administration.)