By This Measure, the U.S. has the 2nd Highest National Debt
USA is #7 in debt to gdp, but #2 in debt to revenue
In absolute terms, the United States is the most indebted country in the world, accounting for 29% of the world’s $60 trillion of sovereign debt.
However, this is not really a fair comparison in some ways because it does not account for the relative wealth of the country in contrast to poorer economies. That’s why it is standard practice to measure sovereign debt in a ratio comparing it directly to the economic productivity, measured by gross domestic product (GDP).
Using this ratio in comparison with other OECD countries, the United States is a modest 7th place (out of 34) in the rankings in terms of its debt load. However, as Jeffrey Dorfman writes in Forbes, comparing debt and GDP has some considerable problems.
The major issue is that economic production cannot be converted directly to dollars that a government can spend. If this were true, a government could claim everyone’s income as taxes and use it to pay down the debt. However, in reality, a 100% tax rate would make everyone would quit their jobs or leave the country. That’s why it makes more sense to compare a government’s debt to the actual tax revenue collected, as this creates a clearer picture of the country’s debt burden and the capacity to pay.
We pulled the latest data from the OECD to compare three ways of measuring the amount of debt that a country has accumulated. The first is the standard Debt to GDP ratio. In addition, we looked at Debt to Revenue (this includes all federal, state, and municipal tax revenues) as well as Debt to Central Government Revenue (this excludes state and municipal tax revenue). The data from the OECD database is from 2013.
When tabulated using all three measures, the world debt picture changes significantly. The United States is 7th in Debt to GDP with a ratio of 103%, but it jumps to 4th place (406%) in terms of Debt to Revenue, and then 2nd place (979%) in terms of Debt to Central Government Revenue. In other words, when it comes to the actual capacity to pay down this debt, the United States is the second most indebted country in the world. Even if the federal government theoretically used all tax revenue to pay down debt, it would take 10 years (not including any interest).
Of course, the United States also has the world’s reserve currency for now, which gives it more flexibility with its debt and monetary policy. This is less true for a country like Greece, where the currency cannot be devalued at all so long as the country is a part of the EU.
How do other major countries do when comparing the regular measure to the new one using revenue? Canada jumps five spots to 5th place with 695%, and Germany jumps nine spots to 6th place. The UK drops five spots down to 16th overall with 351%. Australia rises two spots from 30th to 28th.
Every man woman and child owes $60,000 to the Federal debt for WDC to run. I say let it crawl or better yet, die.
Most of our (USA) transfer payments go to old people.
Why not expect old people to save their own money if they want to retire and pay for their own medical care (or insurance) if they want to start getting body parts fixed or replaced?
Well, you can’t really expect ANYONE to do that if you keep devaluing your currency.
Yet now that we have all this debt, the only way out is by devaluing the currency.
Basically we have dug ourselves into a hole, and there it is.
Our GDP is nothing but lies and made up theories. It is soooo much worse than this chart shows.
And PJ, funny how the federal retirements and benefits are dwarfing many transfer payments but we NEVER see that in a chart. It is nearly impossible to come up with an actual cost as the government has it buried across hundreds of budgets and departments. The one thing I know is it can’t be actually funded anywhere close to where it needs to be.
Time magazine, I believe, did an article a ways back ( a decade, more?) that estimated the cost. The cost of retired and disabled federal employees will DWARF the majority of social security (though medicare will make up a lot, but it all goes to Pharms anyway). The lie is our poor are the ones bankrupting us while the truth is they get mere crumbs from the Federal table. I know, I know, so many think hanging them all will fix it. Sure it will.
The hole you reference is even bigger than most know. And there is NO way it can “fixed,” even with devaluation of our currency. Too big, too late, too entrenched. I’ll be darned if I can come up with even one good way to fix this mess.
Dear Pirate Joe, most of the seniors paid SS and Medicare insurance all their lives, just as you are if you work. Evidently you don’t realize that Medicaid is pure welfare and costs the taxpayers as much each year as SS plus Medicare combined. Again: it’s unfair to attack SS and Medicare insurance yet ignore Medicaid Welfare which cost twice what SS (or Medicare) costs. Also, SS is paid out to anyone disabled regardless of age and to any children who have a mental, behavior, or emotional disability and that is a lot of kids. When you have the urge to wack old people’s retirement (the government took $200,000 of my wages for SS and some more for Medicare) but totally ignore the pure welfare payout of Medicaid which is the biggest budget item, you are being unfair to the working people of America who pay SS, Medicare, Medicaid, general welfare, defense and all the rest (education, police, fire, roads, etc)..
RHSJ, a pie chart I saw within the last year showed SS at 20% of federal outlays, Medicare as another 20%, Medicaid 20% (poor people not old people I know), military/defense 20%, interest on the debt at 10%, and the remaining 10% going toward everything else.
This business of “seniors paid SS and Medicare all their lives” doesn’t hold much water with me, because SO DOES EVERYBODY. Today’s seniors are getting that money (and more) paid back, while today’s 30-year-olds will not – or maybe not? Maybe by then it will take $100 to buy a cup of coffee, and then how can you say you’re getting more than you paid in?
Of course you could put this on the old people for voting themselves a share of the unborn’s earnings, but then who do you blame? I mean, they’re all dead, right? The ones who really made out like bandits are all dead now. Just keep devaluing the currency to get around it.
I really have no idea what will happen. I’m 45, so my own “old age” is still two or three decades away, and I expect it will probably suck. Well, old age sucks anyway. I’m not producing offspring to be tax donkeys or cannon fodder for the system, so once I’m gone the system can do what it likes. “Defeatist” maybe, but in certain situations, the only way to win is to refuse to play.
Pirate Jo.
SS and Medicare outlays are just the total spending on those programs. But, the outlays are offset by the revenue from the SS and Medicare taxes which are specific for those programs. We can argue the revenue is not enough to pay for programs, but if you really wanted to look at a pie chart, you should reduce the total spending by the offsetting revenue to get a sense of how much of the general revenues are going to those programs. As I recall, they are both in surplus right now, but will turn to deficits soon.
Rick
Our beloved Congress critters spent the surpluses already and put IOU’s in their place.
Where are China and Russia on the chart? Their absence is telling.
Pirate Joe: I still didn’t see one word to show you realize that most of SS and Medicare is an insurance/tax system backed up by the government taxpayers to pay the shortfalls whereas all the Medicaid and general welfare comes from those same workers; yet you are full of anger at SS and Medicare but have not word to complain about Medicaid and the hundred different welfare programs. I’m beginning to think you are a paid Communist troll hellbent on attacking just SS and Medicare.