America’s national debt has reached a worrying milestone – it is now as big as the whole of its economy.
The amount owed by the federal government to its creditors, combined with IOUs to government retirement and other schemes, now stands at $15.23 trillion.
The government estimated the value of goods and services produced by the economy in a year at $15.17trillion as of September.
Private projections showed that the economy grew to roughly $15.3 trillion by December, which the debt is likely to surpass this month, USA Today reported today.
Steve Bell of the Bipartisan Policy Center, which has proposed cutting nearly $6trillion over ten years, said: ‘The 100 per cent mark means that your entire debt is as big as everything you’re producing in your country. Clearly, that can’t continue.’
According to long-term forecasts, debt will carry on growing faster than the economy, which would need to expand by at least 6 per year to keep pace.
President Obama’s 2012 budget shows the debt passing $26trillion ten years from now.
By historic standards, that is still high.
The total national debt topped the size of the economy for three years during and after World War II.
It dropped to 32.5 per cent of the economy by 1981, and then started a steady climb under President Reagan, doubling over the next 12 years.
The combination of recession and stimulus spending caused it to soar again under Obama.