Federal Budget Projections

U.S.
posts 19th straight monthly budget

deficit
(Reuters) - The United States posted an $82.69

billion deficit in April, nearly four times the $20.91
billion shortfall registered in April 2009 and the largest
on record for that month, the Treasury Department
said on Wednesday.
GREECE
It was more than twice the $40-billion deficit that Wall Street economists surveyed by Reuters had
forecast and was striking since April marks the filing deadline for individual income taxes that are
the main source of government revenue.
Department officials said that in prior years, there was a surplus during April in 43 out of the past
56 years.
The government has now posted 19 consecutive monthly budget deficits, the longest string of
shortfalls on record.
For the first seven months of fiscal 2010, which ends September 30, the cumulative budget deficit
totals $799.68 billion, down slightly from $802.3 billion in the comparable period of fiscal 2009.
Outlays during April rose to $327.96 billion from $218.75 billion in March and were up from
$287.11 billion in April 2009. It was a record level of outlays for an April.
Department officials noted there were five Fridays in April this year, which helped account for
higher outlays since most tax refunds are issued on that day.
But for the first seven months of the fiscal year, outlays fell to $1.99 trillion from $2.06 trillion in the
comparable period of fiscal 2009, partly because of repayments by banks of bailout funds they
received during the financial crisis.
Receipts in April -- mostly from income taxes -- were $245.27 billion, up from $153.36 billion in
March but lower than the $266.21 billion taken in during April 2009.
Receipts from individuals, who faced an April 15 filing deadline for paying 2009 taxes, fell to
$107.31 billion from $137.67 billion in April 2009.
The U.S. full-year deficit this year is projected at $1.5 trillion on top of a $1.4 trillion shortfall last
year.
White House budget director Peter Orszag told Reuters Insider in an interview on Wednesday that
the United States must tackle its deficits quickly to avoid the kind of debt crisis that hit Greece.
(Reporting by Glenn Somerville, Editing by Diane Craft)
GREECE
May 12, 2010
COMMENTS SEE ALL COMMENTS (244)

May 12, 2010 2:33pm EDT It’s over, send a thank you note to the bufoons in Congress
responsible for bankrupting the nation and also to the FED
Nomorekoolaid Report As Abusive
May 12, 2010 2:42pm EDT To Anacreon in heaven where he sat in full glee,
A few sons of harmony sent a petition,
That he their inspirer and patron would be,
When this answer arrived from the jolly old Grecian:
Voice, fiddle aud flute, no longer be mute,
I’ll lend you my name and inspire you to boot!
And besides I’ll instruct you like me to entwine
The myrtle of Venus and Bacchus’s vine.
—– We are all Greeks now.
Kyung Report As Abusive
May 12, 2010 3:31pm EDT Watching Europe, watching Europe. Everything is a mess in
Europa. Wake up the biggest problems are still in the US. Wall
Street must gain for what? The biggest mistake in history has
been made by your government.
foreigner Report As Abusive
May 12, 2010 3:35pm EDT Stop the damned spending… We are going off a fiscal cliff.
jindy60
Jindy60 Report As Abusive
May 12, 2010 3:36pm EDT My account can’t be overdrawn… I still have checks left!
RalphCramden Report As Abusive
May 12, 2010 3:37pm EDT The Trojan horse Obama is right on track where he wants us.
Lutzito Report As Abusive
May 12, 2010 3:38pm EDT G’bye ya’ll. Been nice knowing you as “Fellow Americans” but I
think I’ll keep my posterior down here in the Republic of Texas as
the house of cards collapses. Hey, at least we have an embassy
we can re-establish in London (still has our name on it and
everything). No other “state” can lay that claim!!
mtnecho Report As Abusive

JANUARY 2010 CURRENT BUDGET PROJECTIONS: SELECTED TABLES FROM CBO’S BUDGET AND ECONOMIC OUTLOOK 1
Summary Table 2.
CBO’s Baseline Budget Outlook
Total, Total,
Actual 2011- 2011-
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2015 2020
In Billions of Dollars
Total Revenues 2,105 2,175 2,670 2,964 3,218 3,465 3,625 3,814 3,996 4,170 4,352 4,563 15,941 36,836
Total Outlays 3,518 _____
_____ 3,524 3,650
____ 3,613
____ 3,756
____ 3,940
____ 4,105
____ 4,335
____ 4,521
____ 4,712
____ 5,000
____ 5,250 _____
____ 19,065 _____
42,883
Total Deficit (-) or Surplus -1,414 -1,349 -980 -650 -539 -475 -480 -521 -525 -542 -649 -687 -3,124 -6,047
On-budget -1,551 -1,434 -1,076 -757 -659 -608 -619 -659 -659 -669 -765 -793 -3,719 -7,263
Off-budgeta 137 86 96 108 120 133 139 138 134 127 116 107 595 1,216
Debt Held by the Public at the

End of the Year 7,544 8,797 9,785 10,479 11,056 11,556 12,055 12,595 13,133 13,678 14,329 15,027 n.a. n.a.
As a Percentage of Gross Domestic Product

Total Revenues 14.8 14.9 17.8 18.8 19.3 19.7 19.7 19.8 19.9 20.0 20.1 20.2 19.1 19.6
Total Outlays 24.7
24.1
____ 24.3
____ 23.0
____ 22.5
____ 22.4
____ 22.3
____ 22.6
____ 22.6
____ 22.6
____ 23.1
____ 23.3
____ 22.9
____ 22.8
____
Total Deficit -9.9 -9.2 -6.5 -4.1 -3.2 -2.7 -2.6 -2.7 -2.6 -2.6 -3.0 -3.0 -3.7 -3.2

End of the Year 53.0 60.3 65.3 66.6 66.3 65.6 65.4 65.5 65.5 65.7 66.1 66.7 n.a. n.a.
Memorandum:
Gross Domestic Product
(Billions of dollars) 14,236 14,595 14,992 15,730 16,676 17,606 18,421 19,223 20,036 20,823 21,667 22,544 83,425 187,719
Source: Congressional Budget Office.

Note: n.a. = not applicable.
a. Off-budget surpluses comprise surpluses in the Social Security trust funds and the net cash flow of the Postal Service.
CBO

CURRENT BUDGET PROJECTIONS: SELECTED TABLES FROM CBO’S BUDGET AND ECONOMIC OUTLOOK 2
Table E-1.
CBO’s Year-by-Year Forecast and Projections for Calendar Years 2009 to 2020
Estimated Forecast Projected
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Nominal GDP
(Billions of dollars) 14,253 14,706 15,116 15,969 16,918 17,816 18,622 19,425 20,231 21,033 21,882 22,770
Nominal GDP
(Percentage change) -1.3 3.2 2.8 5.6 5.9 5.3 4.5 4.3 4.1 4.0 4.0 4.1
Real GDP
GDP Price Index

(Percentage change) 1.2 0.9 0.9 1.0 1.1 1.3 1.6 1.7 1.8 1.8 1.8 1.8
PCE Price Indexa

0.2 1.9 1.1 1.1 1.1 1.3 1.6 1.7 1.8 1.8 1.8 1.8
b
Core PCE Price Index
Consumer Price Index c

d
Core Consumer Price Index
Employment Cost Indexe

Unemployment Rate
(Percent) 9.3 10.1 9.5 8.0 6.3 5.3 5.1 5.0 5.0 5.0 5.0 5.0
Three-Month Treasury
Bill Rate (Percent) 0.1 0.2 0.7 1.9 3.0 3.9 4.2 4.4 4.7 4.8 4.8 4.8
Ten-Year Treasury
Note Rate (Percent) 3.2 3.6 3.9 4.2 4.5 4.9 5.2 5.4 5.6 5.6 5.6 5.6
Tax Bases
(Billions of dollars)
Domestic economic profits 990 1,263 1,307 1,387 1,462 1,487 1,471 1,468 1,484 1,506 1,542 1,588
Wages and salaries 6,329 6,517 6,671 7,149 7,624 8,061 8,445 8,818 9,189 9,554 9,938 10,365
Tax Bases
(Percentage of GDP)
Domestic economic profits 6.9 8.6 8.6 8.7 8.6 8.3 7.9 7.6 7.3 7.2 7.0 7.0
Wages and salaries 44.4 44.3 44.1 44.8 45.1 45.2 45.3 45.4 45.4 45.4 45.4 45.5
Congressional Budget Office; Department of Commerce, Bureau of Economic Analysis; Department of Labor, Bureau of Labor
Statistics; Federal Reserve Board.
Notes: Percentage changes are measured from one year to the next.
GDP = gross domestic product; PCE = personal consumption expenditure.
a. The personal consumption expenditure price index.
b. The personal consumption expenditure price index excluding prices for food and energy.
c. The consumer price index for all urban consumers.
d. The consumer price index for all urban consumers excluding prices for food and energy.
e. The employment cost index for wages and salaries of workers in private industry.

CURRENT BUDGET PROJECTIONS: SELECTED TABLES FROM CBO’S BUDGET AND ECONOMIC OUTLOOK 3

Actual Forecast Projected
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Nominal GDP
(Billions of dollars) 14,236 14,595 14,992 15,730 16,676 17,606 18,421 19,223 20,036 20,823 21,667 22,544
Nominal GDP
Real GDP
GDP Price Index
a
PCE Price Index

0.3 1.9 1.2 1.1 1.1 1.2 1.5 1.7 1.8 1.8 1.8 1.8
Core PCE Price Index b
c
Consumer Price Index
Core Consumer Price Indexd
e
Employment Cost Index
Unemployment Rate
(Percent) 8.5 10.2 9.8 8.4 6.7 5.4 5.1 5.0 5.0 5.0 5.0 5.0
Three-Month Treasury
Bill Rate (Percent) 0.2 0.2 0.5 1.5 2.7 3.7 4.1 4.4 4.6 4.8 4.8 4.8
Ten-Year Treasury
Note Rate (Percent) 3.2 3.5 3.8 4.2 4.5 4.8 5.1 5.3 5.6 5.6 5.6 5.6
Tax Bases
(Billions of dollars)
Domestic economic profits 905 1,226 1,298 1,362 1,445 1,487 1,476 1,466 1,482 1,497 1,532 1,576
Wages and salaries 6,374 6,432 6,638 7,027 7,504 7,961 8,349 8,726 9,099 9,459 9,841 10,254
Tax Bases
(Percentage of GDP)
Domestic economic profits 6.4 8.4 8.7 8.7 8.7 8.4 8.0 7.6 7.4 7.2 7.1 7.0
Wages and salaries 44.8 44.1 44.3 44.7 45.0 45.2 45.3 45.4 45.4 45.4 45.4 45.5
Congressional Budget Office; Department of Commerce, Bureau of Economic Analysis; Department of Labor, Bureau of Labor
Statistics; Federal Reserve Board.
Notes: Percentage changes are measured from one year to the next.
GDP = gross domestic product; PCE = personal consumption expenditure.
a. The personal consumption expenditure price index.
b. The personal consumption expenditure price index excluding prices for food and energy.
c. The consumer price index for all urban consumers.
d. The consumer price index for all urban consumers excluding prices for food and energy.
e. The employment cost index for wages and salaries of workers in private industry.

Actual
2009 2010 2011 2012 2013 2014 2015
Revenues
Individual income taxes 915 945 1,258 1,434 1,595 1,729 1,854
Corporate income taxes 138 148 269 321 352 397 368
Social insurance taxes 891 878 934 993 1,056 1,115 1,165
Other revenues 161 205 212 219 218 228 242
_____ _____ _____ _____ _____ _____ _____
Total Revenues 2,105 2,176 2,673 2,967 3,221 3,469 3,629
On-budget 1,451 1,535 2,000 2,256 2,467 2,671 2,793
Off-budge 654 642 673 711 754 797 836
Outlays
Mandatory spending 2,094 1,969 2,058 1,982 2,063 2,177 2,267
Discretionary spending 1,237 1,367 1,373 1,345 1,345 1,356 1,372
Net interest 187 209 238 282 337 399 462
_____ _____ _____ _____ _____ _____ _____
Total Outlays 3,518 3,545 3,668 3,609 3,746 3,931 4,101
On-budget 3,001 2,988 3,090 3,003 3,110 3,265 3,402
Off-budge 517 557 579 605 636 666 699
Deficit (-) or Surplus -1,413 -1,368 -996 -642 -525 -463 -472
On-budget -1,550 -1,453 -1,089 -747 -643 -593 -609
Off-budget 137 85 94 106 118 131 137
Total,
2011-
2016 2017 2018 2019 2020 2020
Revenues
Individual income taxes 1,969 2,091 2,199 2,316 2,448 18,894
Corporate income taxes 390 396 403 406 419 3,721
Social insurance taxes 1,212 1,260 1,310 1,361 1,416 11,820
Other revenues 247 254 262 272 283 2,437
_____ _____ _____ _____ _____ ______
Total Revenues 3,818 4,000 4,174 4,355 4,567 36,872
On-budget 2,947 3,092 3,229 3,373 3,543 28,371
Off-budge 871 908 945 982 1,024 8,501
Outlays
Mandatory spending 2,412 2,523 2,633 2,834 3,005 23,955
Discretionary spending 1,401 1,425 1,449 1,484 1,517 14,067
Net interest 517 573 626 678 729 4,841
_____ _____ _____ _____ _____ ______
Total Outlays 4,331 4,521 4,708 4,996 5,251 42,862
On-budget 3,595 3,744 3,887 4,127 4,329 35,552
Off-budge 736 777 821 869 922 7,310
Deficit (-) or Surplus -513 -521 -534 -641 -684 -5,990

On-budget -649 -652 -658 -754 -786 -7,181
Off-budget 136 131 124 113 102 1,191
Projections of Mandatory Outlay Actual
Outlays, billions of dollars 2009 2010 2011 2012 2013 2014 2015
Social Security 678 702 728 761 799 837 880
Medicarea 499 532 574 579 637 711 739
Medicaid 251 277 263 264 275 291 311
Income Security
SNAP 56 71 75 76 74 72 69
Unemployment compensation 120 145 88 67 54 48 49
Supplemental Security Income 45 48 54 46 52 53 54
Earned income and child tax credit 67 72 69 42 43 44 45
Family supportb 26 28 26 25 25 25 25
Child nutrition 16 17 18 19 20 20 21
Foster care 7 7 7 7 8 8 8
Making Work Pay and other tax cre 13 25 20 0 0 0 0
Subtotal 350 414 357 283 276 270 271
Civilian and Military Retirement 138 141 143 147 151 156 160
Veteranse 50 62 71 62 68 70 72
Other Programs
Fannie Mae and Freddie Macf 91 21 13 10 8 6 6
TARP 151 -56 4 4 3 3 0
Agriculture 16 18 18 12 17 16 16
MERHCF 8 8 9 9 10 11 12
Higher education -18 -20 -4 -4 -4 -4 1
Universal Service Fund 8 9 9 9 9 9 9
CHIP 8 9 9 10 10 9 7
Social services 5 5 5 5 5 5 5
Deposit Insurance 23 -13 13 0 -17 -17 -17
Other 32 42 38 35 31 30 29
Subtotal 325 22 115 91 73 68 69
Offsetting Receipts
Medicareg -74 -75 -81 -87 -95 -104 -109
Employer's share of Retirement -56 -60 -62 -64 -65 -67 -69
Other -67 -46 -51 -54 -56 -56 -57
Subtotal -197 -181 -194 -205 -216 -227 -236
Total Mandatory Spending 2,094 1,969 2,058 1,982 2,063 2,177 2,267
Total,
Projections of Mandatory Outlay 2011-
Outlays, billions of dollars 2015 2016 2017 2018 2019 2020 2020
Social Security 880 929 984 1,043 1,107 1,174 9,242
Medicarea 739 800 836 874 970 1,046 7,767
Medicaid 311 335 360 386 414 444 3,345
Income Security
SNAP 69 67 65 62 62 61 683
Unemployment compensation 49 51 52 54 56 58 578
Supplemental Security Income 54 61 57 53 60 62 553
Earned income and child tax credit 45 44 44 45 45 45 467
Family supportb 25 25 25 25 25 25 249
Child nutrition 21 22 23 23 24 25 216
Foster care 8 8 8 9 9 9 82
Making Work Pay and other tax cre 0 0 0 0 0 0 22
Subtotal 271 278 275 272 282 286 2,849
Civilian and Military Retirement 160 166 171 177 183 189 1,644
Veteranse 72 79 76 72 79 81 730
Other Programs
Fannie Mae and Freddie Macf 6 5 4 3 3 3 64
TARP 0 0 0 0 0 0 15
Agriculture 16 16 16 16 16 16 159
MERHCF 12 12 13 14 16 17 123
Higher education 1 3 5 6 7 7 14
Universal Service Fund 9 9 9 10 10 10 94
CHIP 7 6 6 6 6 6 75
Social services 5 5 5 5 6 6 53
Deposit Insurance -17 -14 -9 -8 -5 -5 -81
Other 29 29 32 32 32 32 320
Subtotal 69 72 82 85 90 91 836
Offsetting Receipts
Medicareg -109 -116 -123 -130 -142 -154 -1,140
Employer's share of Retirement -69 -72 -75 -78 -81 -84 -716
Other -57 -60 -64 -67 -67 -70 -603
Subtotal -236 -247 -262 -275 -290 -307 -2,459
Total Mandatory Spending 2,267 2,412 2,523 2,633 2,834 3,005 23,955
Billions
Funding for 2010 Change in Funding
2010–2011
Regular Supplemental 2010 Total 2011 Total Billions of
Discretionaray Budget Authority Enacted Requesteda Funding Funding Dollars Percent
Defense 684.1 33.0 717.1 733.1 16.0 2.2%
Nondefense
International affairs 52.9 4.5 57.4 58.8 1.5 2.5%
General science, space, and
technology 31.0 0.0 31.0 31.3 0.4 1.2%
Energy 5.3 0.0 5.3 6.4 1.1 20.0%
Natural resources and environment 36.5 0.0 36.5 35.7 -0.8 -2.2%
Agriculture 6.9 1.2 8.0 6.6 -1.4 -18.1%
Commerce and housing credit 8.5 0.0 8.5 2.3 -6.2 -72.6%
Transportation 35.8 0.0 35.8 33.7 -2.1 -5.9%
Community and regional development 15.9 7.1 23.0 20.7 -2.3 -9.9%
Education, training, employment, and
social services 89.3 0.0 89.3 76.1 -13.2 -14.7%
Health 58.1 0.0 58.1 59.8 1.7 2.9%
Medicare (Administrative costs) 5.9 0.0 5.9 6.5 0.6 9.4%
Income security 66.2 0.0 66.2 66.4 0.2 0.3%
Social Security (Administrative costs) 5.8 0.0 5.8 6.3 0.5 7.9%
Veterans benefits and services 53.2 0.0 53.2 57.2 3.9 7.4%
Administration of justice 51.7 0.0 51.7 48.9 -2.9 -5.5%
General government 19.1 1.4 20.5 20.2 -0.3 -1.6%
Other 0.0 0.0 0.0 0.0 0.0 -0.7%
____ ___ ____ ____ ____ ____
Subtotal, nondefense 542.1 14.1 556.2 536.8 -19.4 -3.5%
Total 1,226.2 47.1 1,273.3 1,269.9 -3.4 -0.3%
Defense excluding Iraq and Afghanistan 554.1 2.0 556.1 573.8 17.7 3.2%
Transportation Obligation Limitations 54.2 0 54.2 54.5 0.2 0.4%

United States public debt 1
United States public debt

When the government spends more than it
receives in tax revenue, it borrows the rest
by issuing US Treasury Securities. The
United States public debt, or the national
debt, is the sum of all these outstanding
securities.[2] It should not be confused with
the trade deficit, which is the difference
between net imports and net exports. State
and Local Government Series securities,
issued by state and local governments, are
not part of the United States government
debt.[3]
The national debt is presented by the United

States Treasury as two calculations: "Debt
Held by the Public", defined as U.S.
Treasury securities held by institutions
outside the United States Government, and
the "Gross Debt," which includes
intra-government obligations (e.g., the
Social Security Trust fund).[2]
As of June 1, 2010, the Total Public Debt

U.S. debt from 1940 to 2009. Red lines indicate the Debt Held by the Public
Outstanding was approximately 88.9% of (public debt) and black lines indicate the gross debt, the difference being that the
GDP, and for the first time exceeded $13 gross debt includes funds held by the government (e.g. the Social Security Trust
trillion.[4] [5] Within the remainder of this Fund). The second chart shows debt as a percentage of U.S. GDP or dollar value of
economic production per year. Data from U.S. Budget historical tables at
article the phrase "Public Debt" is employed [1]
whitehouse.gov/omb and other tables listed when you click on the figure. Note
as a shorthand for "Debt Held by the that the top panel is deflated to 2009 dollars and not in nominal year dollars.
Public".
The annual government deficit or surplus refers to the cash difference between government receipts and spending
ignoring intra-governmental transfers. The gross debt increases or decreases as a result of this unified budget deficit
or surplus. However, there is certain spending (supplemental appropriations) that add to the gross debt but are
excluded from the deficit. The total debt has increased over $500 billion each year since FY 2003, with increases of
$1 trillion in FY2008 and $1.9 trillion in FY2009.[6]
History
USDebt by GDP since 1948:Annual
and Cumulative [7]
The United States has had public debt
since its inception. Debts incurred
during the American Revolutionary
War and under the Articles of
Confederation led to the first yearly
reported value of $75,463,476.52 on
January 1, 1791. Over the following 45
years, the debt grew, briefly contracted
to zero on January 8, 1835 under
President Andrew Jackson but then
quickly grew into the millions again.[8]
The US Federal Debt from 1800 to 1999
The first dramatic growth spurt of the
debt occurred because of the Civil
War. The debt was just $65 million in
1860, but passed $1 billion in 1863 and
had reached $2.7 billion following the
war. The debt slowly fluctuated for the
rest of the century, finally growing
steadily in the 1910s and early 1920s
to roughly $22 billion as the country
paid for involvement in World War
I.[8]
The buildup and involvement in World

War II plus social programs during the
F.D. Roosevelt and Truman
Graph of U.S. gross federal debt between 1940 and 2010 as a percentage of GDP, broken
presidencies in the 1930s and 40's down by presidential terms
caused a sixteenfold increase in the
gross debt from $16 billion in 1930 to $260 billion in 1950.
After this period, the growth of the gross debt closely matched the rate of inflation where it tripled in size from $260
billion in 1950 to around $909 billion in 1980. Gross debt in nominal dollars quadrupled during the Reagan and
Bush presidencies from 1980 to 1992. The Public debt quintupled in nominal terms.
In nominal dollars the public debt rose and then fell between 1992 and 2000 from $3T in 1992 to $3.4T in 2000.
During the administration of President George W. Bush, the gross debt increased from $5.6 trillion in January 2001
to $10.7 trillion by December 2008,[9] rising from 58% of GDP to 70.2% of GDP. During March 2009, the
Congressional Budget Office estimated that gross debt will rise from 70.2% of GDP in 2008 to 100.6% in 2012.[10]
Year as % of GDP Debt Held By Public ($Billions) as % of GDP

Gross Debt in Billions
[11]
undeflated
1910 2.6 unk. 2.6 unk.
1920 25.9 unk. 25.9 unk.
1928 [12] unk. 18.5 unk.

18.5
1930 16.2 unk. 16.2 unk.
1940 50.6 52.4 42.8 44.2
1950 256.8 94.0 219.0 80.2
1960 290.5 56.0 236.8 45.6
1970 380.9 37.6 283.2 28.0
1980 909.0 33.4 711.9 26.1
1990 3,206.3 55.9 2,411.6 42.0
2000 5,628.7 58.0 3,409.8 35.1
2001 5,769.9 57.4 3,319.6 33.0
2002 6,198.4 59.7 3,540.4 34.1
2003 6,760.0 62.6 3,913.4 35.1
2004 7,354.7 63.9 4,295.5 37.3
2005 7,905.3 64.6 4,592.2 37.5
2006 8,451.4 65.0 4,829.0 37.1
2007 8,950.7 65.6 5,035.1 36.9
2008 9,985.8 70.2 5,802.7 40.8
2009 12,311.4 86.1 7,811.1 54.6
2010 (4 13,050.8 90 ? ?
june)
2010 (est.) 14,456.3 98.1 9,881.9 67.1
2011 (est.) 15,673.9 101.0 10,873.1 70.1
2012 (est.) 16,565.7 100.6 11,468.4 69.6
2013 (est.) 17,440.2 99.7 12,027.1 68.7
2014 (est.) 18,350.0 99.8 12,594.8 68.5
Debt ceiling
The Second Liberty Bond Act of 1917 established a statutory limit on federal debt.[13] Congress had previously
approved each debt issuance separately. The debt limit provided the U.S. Treasury with more leeway in the
administration of debt, allowing for modern management techniques in government finance.
The U.S. Treasury Department now conducts more than 200 sales of debt by auction every year. The Treasury has
been granted authority by Congress to issue such debt as was needed to fund government operations as long as the
total debt (excepting some small special classes) does not exceed a stated ceiling.
[14]
The most recent increase in the U.S. debt ceiling to $14.3 trillion by H.J.Res. 45 and was signed into law on
February 12, 2010.
Components
Public and government accounts

The national debt is broken down into 2
main categories:[15]
1. Securities held by the public
• Marketable securities
• Non-marketable securities
2. Securities held by government accounts
The values for fiscal years 1999-2008 are
published by the treasury[15] and about 60%
of the debt is held by the public.
As of 2008, Social Security Federal
Old-Age and Survivors Insurance Trust
Fund holds about half of the government
held portion of the debt at 2.2 trillion Detailed breakdown of government holders of treasury debt and debt instruments
used of the public portion.
dollars, with other large holders including
the Federal Housing Administration, the
Federal Savings and Loan Corporation's Resolution Fund and the Federal Hospital Insurance Trust Fund. Most of the
public debt is in notes and bills with only about one trillion in bonds and inflation protected bonds.
Estimated ownership
Because a large variety of people own the

notes, bills, and bonds in the "public"
portion of the debt, the U.S. Treasury also
publishes information that groups the types
of holders by general categories to portray
who owns United States debt. In this data
set, some of the public portion is moved and
combined with the total government portion,
because this amount is owned by the Federal
Reserve as part of United States monetary
policy. (See Federal Reserve System)
As is apparent from the chart, a little less Estimated ownership of US public debt in 2008.
than half of the total national debt is owed to
the "Federal Reserve and intragovernmental
holdings". The foreign and international holders of the debt are also put together from the notes, bills, and bonds
sections. Below is a chart for the data as of June 2008:
Fannie Mae and Freddie Mac obligations

excluded
Although not included in the figures

reported by the government, the U.S.
government has moved to more explicitly
support the soundness of obligations of
Freddie Mac and Fannie Mae, starting in
July via the Housing and Economic
Recovery Act of 2008, and the September 7,
2008 Federal Housing Finance Agency
(FHFA) conservatorship of both government Estimated ownership each year through time.
sponsored enterprises (GSEs). The on- or
off-balance sheet obligations of those two independent GSEs was just over $5 trillion at the time the conservatorship
was put in place.[16]
The government accounts for these corporations as if they are unconnected to its balance sheet. At the inception of
the conservatorship, the U.S. Treasury contracted to receive US$1 billion in senior preferred shares, and a warrant
for 79.9% of the common shares from each GSE, as a fee to fund, as needed, up to US$100 billion total for each
GSE (in exchange for more senior preferred stock), in order to maintain solvency and adequate capital ratios at the
GSEs, thereby supporting all senior (normal) liabilities, subordinated indebtedness, and guarantees of the two firms.
Some observers see this as an effective nationalization of the companies that ultimately places taxpayers at risk for
all their liabilities[17] [18]
The net exposure to taxpayers is difficult to determine at the time of the takeover and depends on several factors,
such as declines in housing prices and losses on mortgage assets in the future.[19] The Congressional Budget Office
has recommended incorporating the assets and liabilities of the two companies into the federal budget due to the
degree of government control over the entities.[20] The 5-year credit default swap spread for U.S. treasuries had risen
to 18 basis points per annum as of 9 September 2008 as a result of market perception regarding the increased debt
load of the government.[20]
On January 8, 2009, Moody's said that only 4 of the 12 Federal Home Loan Banks (FHLB) may be able to maintain
minimum required capital levels and the U.S. government may need to put some of them into conservatorship. [21]
According to Bloomberg, the FHLB is the largest U.S. borrower after the federal government. [21]
Guaranteed obligations excluded

Starting in late 2008, the U.S. federal government is guaranteeing large amounts of obligations relating to mutual
funds, banks, and corporations under several new programs designed to deal with the problems initiated by the
Liquidity crisis of September 2008. Guarantees are off-balance sheet and therefore excluded in the calculation of
federal debt. The funding of direct investments made in response to the crisis, such as those made under the Troubled
Assets Relief Program, are captured by the debt totals.
Foreign ownership
The US debt in the hands of foreign governments was 25% of the total in 2007,[22] virtually double the 1988 figure
of 13%.[23] Despite the declining willingness of foreign investors to continue investing in US dollar denominated
instruments as the US dollar fell in 2007,[24] the U.S. Treasury statistics indicate that, at the end of 2006, non-US
citizens and institutions held 44% of federal debt held by the public.[25] About 66% of that 44% was held by the
central banks of other countries, in particular the central banks of Japan and China. In May 2009, the US owed China
$772 billion.[26]
In total, lenders from Japan and China held 44% of the foreign-owned debt.[27] This exposure to potential financial
or political risk should foreign banks stop buying Treasury securities or start selling them heavily was addressed in a
recent report issued by the Bank of International Settlements, which stated, "'Foreign investors in U.S. dollar assets
have seen big losses measured in dollars, and still bigger ones measured in their own currency. While unlikely,
indeed highly improbable for public sector investors, a sudden rush for the exits cannot be ruled out completely."[28]
On May 20, 2007, Kuwait discontinued pegging its currency exclusively to the dollar, preferring to use the dollar in
a basket of currencies.[29] Syria made a similar announcement on June 4, 2007.[30] In September 2009 China, India
and Russia said they were interested in buying IMF gold to diversify their dollar-denominated securities.[31]
The following is a list of the Foreign Owners of U.S. Treasury Securities as listed by the U.S. Treasury:[27]
Leading Foreign owners of US Treasury Securities (Feb 2010)
Nation billions of percentage

dollars
People's Republic of China (mainland) 877.5 23.4
Japan 768.5 20.5
United Kingdom 233.5 6.2
Oil exporters 218.8 5.8
Brazil 170.8 4.6
Special Administrative Region of the People's Republic of China (Hong Kong) 152.4 4.1
Republic of China (Taiwan) 121.4 3.2
Russia 120.2 3.2
Grand Total 3750.5 65.8
Statistics and comparables

• U.S. official gold reserves, totaling 261.5 million troy ounces, have a book value as of 30 November 2009 of
approximately $11 billion,[32] vs. a commodity value as of 17 December 2009 of approximately $288.5 billion.[33]
• A total of 161,000 tonnes of gold have been mined in human history, as of 2009.[34] This is roughly equivalent to
5.175 billion troy ounces, which, at $1000 per troy ounce, would be $5.2 trillion.[35]
• Foreign exchange reserves $134 billion as of October 2009.[36]
• The Strategic Petroleum Reserve had a value of approximately $69 billion as of December 2009, at a Market
Price of $104/barrel with a $15/barrel discount for sour crude.[37]
• The national debt equates to $30,400 per person U.S. population, or $60,100 per member of the U.S. working
population,[38] as of February 2008.
• In 2008, $242 billion was spent on interest payments servicing the debt, out of a total tax revenue of $2.5 trillion,
or 9.6%. Including non-cash interest accrued primarily for Social Security, interest was $454 billion or 18% of tax
revenue.[39]
• Total U.S. household debt, including mortgage loan and consumer debt, was $11.4 trillion in 2005. By
comparison, total U.S. household assets, including real estate, equipment, and financial instruments such as
mutual funds, was $62.5 trillion in 2005.[40]
• Total U.S Consumer Credit Card revolving credit debt was $931.0 billion in April 2009.[41]
• Total third world debt was estimated to be $1.3 trillion in 1990.[42]
• The U.S. balance of trade deficit in goods and services was $725.8 billion in 2005.[43]
• The global market capitalization for all stock markets that are members of the World Federation of Exchanges
was $32.5 trillion by the end of 2008.[44]
Risks and obstacles
Risks to the U.S. dollar and economy

A high debt level can affect inflation, interest rates, and economic growth. A variety of factors are placing increasing
pressure on the value of the U.S. dollar, increasing the risk of devaluation or inflation and encouraging challenges to
dollar's role as the world's reserve currency. If another currency or basket of currencies replaced the dollar as the
reserve currency, the U.S. would face higher interest rates to attract capital, reducing economic growth for the
long-term. The Economist wrote in May 2009:
"Having spent a fortune bailing out their banks, Western governments will have to pay a price in terms
of higher taxes to meet the interest on that debt. In the case of countries (like Britain and America) that
have trade as well as budget deficits, those higher taxes will be needed to meet the claims of foreign
creditors. Given the political implications of such austerity, the temptation will be to default by stealth,
by letting their currencies depreciate. Investors are increasingly alive to this danger..."[45]
Key drivers of these risks relate to the unwillingness of the U.S. to live within its means, both from a budget deficit
and trade deficit standpoint. For example, the Government Accountability Office (GAO), the Federal Government's
auditor, argues that the U.S. is on a fiscally "unsustainable" path and that politicians and the electorate have been
unwilling to change this path.[46] The 2010 U.S. budget indicates annual debt increases of nearly $1 trillion annually
through 2019. By 2019 the total U.S. national debt is projected to be $18.4 trillion.[47] Further, the subprime
mortgage crisis has significantly increased the financial burden on the U.S. government, with over $10 trillion in
commitments or guarantees and $2.6 trillion in investments or expenditures as of May 2009, only some of which are
included in the budget document.[48]
The U.S. also has a large trade deficit, meaning imports exceed exports. Financing these deficits requires the USA to
borrow large sums from abroad, much of it from countries running trade surpluses, mainly the emerging economies
in Asia and oil-exporting nations. The balance of payments identity requires that a country (such as the USA)
running a current account deficit also have a capital account (investment) surplus of the same amount. In 2005, Ben
Bernanke addressed the implications of the USA's high and rising current account (trade) deficit, resulting from USA
imports exceeding its exports. Between 1996 and 2004, the USA current account deficit increased by $650 billion,
from 1.5% to 5.8% of GDP.[49]
Debt levels may also affect economic growth rates. Economists Kenneth Rogoff and Carmen Reinhart reported in
2010 that among the 20 advanced countries studied, average annual GDP growth was 3-4% when debt was relatively
moderate or low (i.e. under 60% of GDP), but it dips to just 1.6% when debt was high (i.e. above 90% of GDP).[50]
Rollover and maturity risks

In addition to the debt increase required to fund government spending in excess of tax revenues during a given year,
some Treasury securities issued in prior years mature and must be "rolled-over" or replaced with new security
issuance. During the financial crisis, the Treasury issued a sizable amount of relatively shorter-term debt, which
caused the average maturity on total Treasury debt to reach a 25-year low of just more than 50 months in 2009. As of
late 2009, roughly 43% of U.S. public debt needed to be rolled over within 12 months, the highest proportion since
the mid-1980s. The relatively short maturity of outstanding Treasury debt, coupled with the increased reliance on
foreign creditors, puts the U.S. at greater risk of sharply higher borrowing costs should risk perceptions change
abruptly in credit markets.[50]
Long-term risks to financial health of federal government

Several government agencies provide
budget and debt data and analysis.
These include the Government
Accountability Office (GAO), the
Congressional Budget Office, the
Office of Management and Budget
(OMB), and the U.S. Treasury
Department. These agencies have
reported that the federal government is
facing a series of critical long-term
financing challenges. This is because
expenditures related to entitlement
programs such as Social Security,
Medicare, and Medicaid are growing
considerably faster than the economy
overall, as the population grows older. Risks due to increasing entitlement spending, according to GAO's projections of future
trends.
These agencies have indicated that
under current law, sometime between 2030 and 2040, mandatory spending (primarily Social Security, Medicare,
Medicaid, and interest on the national debt) will exceed tax revenue. In other words, all discretionary spending (e.g.,
defense, homeland security, law enforcement, education, etc.) will require borrowing and related deficit spending.
These agencies have used such language as "unsustainable" and "trainwreck" to describe such a future.[51]
While there is significant debate about solutions,[52] the significant long-term risk posed by the increase in
entitlement spending is widely recognized[53] , with health care costs (Medicare and Medicaid) the primary risk
category.[54] [55] If significant reforms are not undertaken, benefits under entitlement programs will exceed
government income by over $40 trillion over the next 75 years.[56] According to the GAO, this will cause debt ratios
relative to GDP to double by 2040 and double again by 2060, reaching 600 percent by 2080.[57]
In 2006, Professor Laurence Kotlikoff argued the United States must eventually choose between "bankruptcy",
raising taxes, or cutting payouts. He assumes there will be ever-growing payment obligations from Medicare and
Medicaid.[58] Others who have attempted to bring this issue to the fore of America's attention range from Ross Perot
in his 1992 Presidential bid, to motivational speaker Robert Kiyosaki, and David Walker, former head of the
Government Accountability Office.[59] [60]
Thomas Friedman has argued that increasing dependence on foreign sources of funding will render the U.S. less able
to act independently.[61]
Unfunded obligations
The U.S. government is committed under current law to mandatory payments for programs such as Medicare,
Medicaid and Social Security. The GAO projects that payouts for these programs will significantly exceed tax
revenues over the next 75 years. The Medicare Part A (hospital insurance) payouts already exceed program tax
revenues and Social Security payroll taxes fully cover payouts only until 2017. These deficits require funding from
other tax sources or borrowing.[51]
The present value of these deficits or unfunded obligations is an estimated $45.8 trillion. This is the amount that
would have to be set aside during 2009 such that the principal and interest would pay for the unfunded commitments
through 2084. Approximately $7.7 trillion relates to Social Security, while $38.2 trillion relates to Medicare and
Medicaid. In other words, health care programs are nearly five times as serious a funding challenge as Social
Security. Adding this to the national debt and other federal commitments brings the total obligations to nearly $62
trillion.[62]
The Congressional Budget Office (CBO) has indicated that: "Future growth in spending per beneficiary for Medicare
and Medicaid—the federal government’s major health care programs—will be the most important determinant of
long-term trends in federal spending. Changing those programs in ways that reduce the growth of costs—which will
be difficult, in part because of the complexity of health policy choices—is ultimately the nation’s central long-term
challenge in setting federal fiscal policy."[63]
Recent additions to the public debt of the United States
Deficit and debt increases 2001-2009.
Recent additions to U.S. public debt
Fiscal year (begins Value % of GDP

10/01 of prev. year)
2001 $144.5 billion 1.4%
2002 $409.5 billion 3.9%
2003 $589.0 billion 5.5%
2004 $605.0 billion 5.3%
2005 $523.0 billion 4.3%
2006 $536.5 billion 4.1%
2007 $459.5 billion 3.4%
2008 $1017.0 billion (proj.) 7.4%
There is a significant difference between the reported budget deficit and the change in debt. The key differences are:
1) The Social Security surplus, which reduces the "off-budget" deficit often reported in the media; and 2)
Non-budgeted spending, such as for the Iraq and Afghanistan wars. The debt increased by approximately $550
billion on average each year during the 2003-2007 period, but then increased over $1 trillion during FY 2008.
The cumulative debt of the United States in the past 8 completed fiscal years was approximately $4.3 trillion, or
about 43% of the total national debt of ~$10.0 trillion as of September 2008.[64] [65]
Interest expense
Budgeted net interest on the public
debt was approximately $240 billion in
fiscal years 2007 and 2008. This
represented approximately 9.5% of
government spending. Interest was the
fourth largest single budgeted
disbursement category, after defense,
Social Security, and Medicare.[66]
Despite higher debt levels, this
declined to $189 billion in 2009 or
approximately 5% of spending, due to
lower interest rates. Average interest
rates declined due to the crisis from
1.6% in 2008 to 0.3% in 2009.[67]
During FY2008, the government also

Components of interest on the debt.
accrued a non-cash interest expense of
$212 billion for intra-governmental
debt, primarily the Social Security Trust Fund, for a total interest expense of $454 billion.[68] This accrued interest is
added to the Social Security Trust Fund and therefore the national debt each year and will be paid to Social Security
recipients in the future.
Public debt owned by foreigners has increased to approximately 50% of the total or approximately $3.4 trillion.[69]
As a result, nearly 50% of the interest payments are now leaving the country, which is different from past years
when interest was paid to U.S. citizens holding the public debt. Interest expenses are projected to grow dramatically
as the U.S. debt increases and interest rates rise from very low levels in 2009 to more typical historical levels. CBO
estimates that nearly half of the debt increases over the 2009-2019 period will be due to interest.[70]
Should interest rates return to historical averages, the interest cost would increase dramatically. Historian Niall
Ferguson described the risk that foreign investors would demand higher interest rates as the U.S. debt levels increase
over time in a November 2009 interview.[71]
Debt clocks
In several cities around the United States, there are national debt
clocks—electronic billboards that illustrate government debt.
Some also attempt to show the money owed per capita or per
family. There is a significant level of fluctuation day-to-day, both
up and down, so any "clocks" must be continually re-set with
proper values.
The first and most famous debt clock, the National Debt Clock
located near Times Square in New York City, was created by real
estate investor Seymour Durst.[72] [73] With Seymour's death, his
son Douglas Durst took over responsibility for the clock through
the Durst Organization.
Although the total debt continued to increase, the clock was
deactivated in 2000 when the public debt began to decrease due to
budget surpluses.[74] However, following large increases in the
debt (total and public) a few years later, the clock was reactivated
in July 2002.[75]
The NYC debt clock in late 2009.
In 2004, the original clock was unmounted from its location near
42nd Street; the building has since made way for One Bryant Park.
An updated model, which could run backwards, was installed one block away on a Durst building at 1133 Avenue of
the Americas. Since September 30, 2008, when the debt surpassed $10 trillion, the clock's dollar sign has been
replaced by the extra digit. An upgrade adding to the digits had been announced for 2009, but so far has not been
undertaken.
Calculating and projecting the debt

Tracking current levels of debt is a cumbersome but
rather straightforward process. Making future
projections is much more difficult for a number of
reasons. For example, before the September 11, 2001
attacks, the George W. Bush administration projected
in the 2002 budget that there would be a $1.288 trillion
surplus from 2001 through 2004.[76]
In the 2005 Mid-Session Review, however, this had

changed to a projected deficit of $850 billion, a swing
of $2.138 trillion.[77] The latter document states that 49
percent of this swing was due to "economic and
technical re-estimates", 29 percent was due to "tax
2010 Budget: Projected deficits and debt increases in President
relief", (mainly the 2001 and 2003 Bush tax cuts), and Obama's 2010 Budget.
the remaining 22 percent was due to "war, homeland,
and other enacted legislation" (mainly expenditures for the War on Terror, Iraq War, and homeland security).
Projections between different groups will sometimes

differ because they make different assumptions. For
example, in August 2003, a Congressional Budget
Office report projected a $1.4 trillion deficit from 2004
through 2013.[78]
However, a mid-term and long-term joint analysis a
month later by the Center on Budget and Policy
Priorities, the Committee for Economic Development,
and the Concord Coalition stated that "In projecting
deficits, CBO follows mechanical 'baseline' rules that
do not allow it to account for the costs of any
prospective tax or entitlement legislation, no matter
2010 Budget: Total Debt $ and % to GDP.
how likely the enactment of such legislation may be."
The analysis added in a proposed tax cut extension and
Alternative Minimum Tax reform (enacted by a 2005 act), prescription drug plan (Medicare Part D, enacted in a
2003 act), and further increases in defense, homeland security, international, and domestic spending. According to
the report, this "adjusts CBO's official ten-year projections for more realistic assumptions about the costs of budget
policies", raising the projected deficit from $1.4 trillion to $5 trillion.[79]
The 2010 Budget proposed by President Barack Obama projects significant debt increases, both in terms of dollars
and relative to GDP.[80] [81] The debt is projected to nearly double to $20 trillion by 2015, but is expected to increase
to nearly 100% of GDP by 2020 and remain at that level thereafter. These estimates assume real GDP growth (after
inflation) ranging from 2.6% to 4.6% annually from 2010 through 2019, which exceeds Blue Chip consensus
estimates.[82]
During FY 2008, approximately 76.6% of federal spending was in the following categories: Departments of Health
and Human Services (19.8%), Defense (20.3%) and Veterans Affairs (11.8%); Social Security Administration
(18.2%); interest on the public debt (6.6%).[83]
The Office of Management and Budget forecasts that, by the end of fiscal year 2012, gross federal debt will total
$16.3 trillion. Thus, the debt will equal 101% of gross domestic product, which represents a milestone in the U.S.
economy. Public debt alone, which excludes amounts that the government owes its citizens via various trust funds,
will be 67% of GDP by the end of fiscal 2012.[84]
Monitoring the risks of increasing debt levels

Various financial indicators may provide an early warning that market forces are reacting to an increasing level of
debt. Examples include Treasury security interest rates (yields), Treasury auction results, credit default swap spreads,
and TIPS spreads.
• Treasury note yields: A rising yield for a security of a given maturity could indicate lower demand for Treasury
bonds among investors, or nervousness about future rates of inflation. The "yield curve" (a graph that relates the
yields of similar securities of different maturities) provides similar information.
• Treasury auctions: The ease with which new securities can be sold reflects the demand for them. For example, a
difference between the interest rate that debt trades prior to auction and the yield required to clear the market at
auction is called the "tail." A large auction “tail” would be a sign of declining interest from the market. The
Treasury also reports the bid-to-cover ratio for each auction, which is the number of market bids received relative
to the number of bids accepted and the ratio of international buyers.
• Credit default swap (CDS) spreads: CDS are insurance-like derivative products that offer protection against bond
defaults. CDS spreads essentially measure the current market price of insurance against default. When the market
perceives a bond is at an increased risk of default, the CDS written on those bonds will increase in price.
• TIPS spreads: A key measure of inflation expectations among U.S. bond market investors is the difference
between the yield on nominal Treasury bonds and the yield for Treasury inflation-protected securities, or “TIPS.”
This difference is a gauge of investors’ beliefs about future U.S. inflation rates. A growing spread between
nominal Treasuries and TIPS would indicate that investors are concerned that U.S. fiscal and monetary policy
could lead to higher inflation in the future.[85]
Debate regarding a "danger level" of debt

Economists debate the level of debt relative to GDP that signals a "red line" or dangerous level, or if any such level
exists. Economists Kenneth Rogoff and Carmen Reinhart reported in January 2010 that 90% of GDP represents this
danger level.[86] Reinhart testified to the U.S. Senate in February 2010, stating:[87]
Our main finding is that across both advanced countries and emerging markets, high debt/GDP levels
(90 percent and above) are associated with notably lower growth outcomes. Above 90 percent, median
growth rates fall one percent, and average growth falls considerably more. In addition, for emerging
markets, there appears to be a more stringent threshold for total external debt/GDP; when external debt
reaches 60 percent of GDP, annual growth declines by about two percent and for higher levels, growth
rates are roughly cut in half. Seldom do countries simply 'grow' their way out of deep debt burdens.
Economist Paul Krugman disputed the existence of a solid debt threshold or danger level, arguing that low growth
causes high debt rather than the other way around.[88] He also points out that in Europe, Japan, and the US this has
been the case. In the US the only period of debt over 90% of GDP was after World War II when "when real GDP
was falling, not because of debt problems, but because wartime mobilization was winding down and Rosie the
Riveter was becoming a suburban housewife."[89] Fed Chair Ben Bernanke stated in April 2010:[90]
Neither experience nor economic theory clearly indicates the threshold at which government debt begins
to endanger prosperity and economic stability. But given the significant costs and risks associated with a
rapidly rising federal debt, our nation should soon put in place a credible plan for reducing deficits to
sustainable levels over time.
There is also a second debate regarding whether debt held by the public (a lower amount) or gross debt (a larger
amount) is the appropriate measure to use in evaluating the debt burden, measured as a percent of GDP. Krugman
argued in May 2010 that the debt held by the public is the right measure to use, while Reinhart has testified to the
President's Fiscal Reform Commission that gross debt is the right figure. Certain members of the Commission are
focusing on gross debt.[88] The Center on Budget and Policy Priorities (CBPP) cited research by several economists
supporting the use of the lower debt held by the public figure as a more accurate measure of the debt burden,
disagreeing with these Commission members.[91]
This second debate relates to the economic nature of the intragovernmental debt that represents the difference
between the two debt figures. As of April 30, 2010 the public debt was $8.4 trillion (59% GDP) and the gross debt
was $12.9 trillion (90% of GDP), using a $14.3 trillion GDP estimate. The difference is the $4.5 trillion
intra-governmental debt, mainly represented by the Social Security Trust Fund.[92]
For example, the CBPP argues:[91]
Debt held by the public is important because it reflects the extent to which the government goes into
private credit markets to borrow. Such borrowing draws on private national saving and international
saving, and therefore competes with investment in the nongovernmental sector (for factories and
equipment, research and development, housing, and so forth). Large increases in such borrowing can
also push up interest rates and increase the amount of future interest payments the federal government
must make to lenders outside of the United States, which reduces Americans’ income. By contrast,
intragovernmental debt (the other component of the gross debt) has no such effects because it is simply
money the federal government owes (and pays interest on) to itself.
Current projections indicate the lower debt held by the public figure will hit 90% of GDP by 2020.[93]
See also
US topics:
• History of the U.S. public debt - a table containing historical debt data
• US total cumulative debt per person
• National debt by U.S. presidential terms
• Emergency Economic Stabilization Act of 2008 - part of the Troubled Asset Relief Program
• United States federal budget - analysis of federal budget spending and long-term risks
• Economy of the United States - discusses U.S. national debt and economic context
General:
• Public debt - a general discussion of the topic
• Balance of payments
• Budget deficit
• Deficit
• Inflation
• Securities
• National bankruptcy
• Fiat currency
International:
• Global debt
• List of public debt - list of the public debt for many nations, as a percentage of the GDP
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• Wright, Robert (2008). One Nation Under Debt: Hamilton, Jefferson, and the History of What We Owe. Mc-Graw
Hill. ISBN 0071543937.Argues that America completely paid off its first national debt but is unlikely to do so
again.
• Bonner, William; Wiggin, Addison (2006). Empire of Debt: the Rise of an Epic Financial Crisis. Wiley.
ISBN 047178253X. Argues that America is a world empire that uses credit in lieu of tribute and that history
shows this to be unsustainable.

• Cavanaugh, Frances X. (1996). The Truth About the National Debt: Five Myths and One Reality. Boston, Mass.:
Harvard Business School Press. ISBN 087584734X. Argues that the US is in good economic condition and that
talk of the consequences of its debt is unduly alarmist.
• Hargreaves, Eric L. (1966). The National Debt.
• Macdonald, James (2006). A Free Nation Deep in Debt: The Financial Roots of Democracy. Princeton University
Press. ISBN 0-691-12632-1. Argues that democracies eventually defeat autocracies because "countries with
representative institutions are able to borrow more cheaply than those with autocratic governments" (p. 4). Bond
markets also strengthen democracies internally by giving citizens some of the proverbial power of the purse and
by aligning their interests with those of their governments.
• Rothbard, Murray Newton (1994). The Case Against the Fed. Auburn, AL: Ludwig Von Mises Institute.
ISBN 094546617X. Describes the process of debt monetization by a nation's central bank and it's unfortunate
consequences on society.
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External links
• Documentary about the debt, "Ten Trillion and Counting" (http://www.pbs.org/wgbh/pages/frontline/
tentrillion/), by PBS Frontline
• Bureau of the Public Debt (http://www.publicdebt.ustreas.gov/)
• The gross and public debt (http://www.treasurydirect.gov/NP/BPDLogin?application=np)
• The United States Public Debt, 1861 to 1975 (http://eh.net/encyclopedia/?article=noll.publicdebt)
• GAO Citizen's Guide - 2008 (http://www.gao.gov/financial/citizensguide2008.pdf)
• The United States Public Debt placed in context to the Worlds Gold Supply (http://www.michaelburns.net/
USDebt.shtml)
Article Sources and Contributors 18
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News » Washington Politics The Oval: Tracking the Obama Presidency USA TODAY On Politics Census
Nation's soaring deficit calls for painful

choices
Updated 4/14/2010 7:17 PM | Comments 3,663 | Recommend 48 E-mail | Save | Print | Reprints & Permissions |
By Richard Wolf, USA TODAY
WASHINGTON — Erskine Bowles realized

how tough his task will be leading President
Obama's war on the federal budget deficit
when he told his 90-year-old mother of his
appointment.
She was proud of him. Then she said, "Don't

mess with my Medicare."
Enlarge By Alex Wong, Getty Images It won't be the last threat Bowles gets this
year as he directs an 18-member, bipartisan
Rep. Paul Ryan, shown here in March, has proposed commission through an ocean of red ink that
reductions in future Medicare and Social Security has never been deeper or more foreboding.
benefits for people under 55, a politically difficult
idea. Under Obama's budget plan, the USA's debt
in 2020 would be nearly the size of the entire
economy then. Interest costs would be $900 billion, five times
today's level.
PUBLIC OPINION
The White House, Congress, budget experts and typical
Americans are growing anxious about the nation's mounting
debt, which is helping to fuel the rise of the anti-tax, anti-big
government Tea Party movement.
Yet the only solutions capable of raising enough money are

politically dangerous for the president and Congress: tax
increases and major reductions in Medicare, Medicaid and
Social Security.
Neither Democrats nor Republicans want to take the first step.

The debt hasn't stopped conservatives from saying tax
increases should be off the table when the panel debates how
to close Washington's budget gap — an estimated $1.5 trillion
this year alone, equal to the entire federal budget in 1995. Nor
has it stopped liberals from saying Medicare, Social Security
From Truman to Obama, see each president's and other entitlements must be protected.
ratings w ith USA TODAY's approval tracker.
Bowles, outgoing president of the University of North Carolina
and a White House chief of staff under Bill Clinton, says neither
taxes nor benefits can be off-limits.
"We can't do this without a lot of pain," he says.
His partner leading the panel, former senator Alan Simpson, a

Wyoming Republican, eagerly awaits the howls of protest from
both sides.
"I'll be called the Republican toady," says the 6-foot-6, salty-

tongued Simpson. "I don't give a crap."
Although a solution to the nation's $12.8 trillion debt remains

elusive, most of the nation's power brokers agree on the
problem: America owes too much money.
By 2020, the taxes it is projected to collect barely would cover

the benefits it has promised and the interest it must pay.
Without changes, almost nothing will be left for defense,
education, veterans or anything else.
"To avoid large and unsustainable budget deficits, the nation

will ultimately have to choose among higher taxes,
modifications to entitlement programs such as Social Security
and Medicare, less spending on everything else from education
to defense, or some combination of the above," Federal
Reserve Chairman Ben Bernanke said last week.
Experts say the government could be forced to address the

budget gap if lenders such as China become more worried
about the size of the U.S. debt and demand higher interest rates
on Treasury bonds. China reduced its U.S. debt portfolio in
three consecutive months through January, the most recent
statistics show.
"This is the most predictable financial crisis in the history of our

country," says Rep. Paul Ryan, a Wisconsin Republican.
He has proposed reducing future Medicare and Social Security

benefits for people younger than 55 to prevent the programs
from sucking up an ever larger share of federal taxes as Baby
Boomers retire.
"It's immoral to ignore it," Ryan says of the U.S. debt.
Most Americans don't want to ignore it.
A USA TODAY/Gallup Poll in late March found that nearly two-thirds disapproved of Obama's handling of the
deficit.
Nearly 80% said it would be very important in their votes for Congress this fall — more than terrorism or the war
in Afghanistan.
The public awareness is best exemplified by the Tea Party movement, which has used the rise in government
spending and debt to motivate thousands of people across the country.
On Thursday, Tea Party activists will gather at the Washington Monument to rally against big government and the
record deficit.
Young people are particularly vulnerable to the soaring debt.
"Things are being done to you, not for you," warned David Walker, the former U.S. comptroller general, at a
"Fiscal Solutions" forum at the University of Maryland this month.
"Your future is being mortgaged at record rates."
"Very depressing," groused Rennie Silva, a 26-year-old graduate student in public policy, after the presentation.
"We need to throw out the scoundrels who are making some of these irresponsible decisions."
Others have it worse — for now
For now, the deficit is manageable, and necessary to help prod the economy back to health, say economists
such as White House budget director Peter Orszag.
So far this fiscal year, the debt held by the public — not including money the government owes itself — is 58% of
the U.S. economy.
It's roughly half Italy's 113% debt as a share of the economy's annual output. Japan's is 105%; Britain, France
and Germany are between 62% and 70%.
Interest on the debt can still be paid without major tax increases; creditors and credit agencies aren't panicking
usatoday.com/…/2010-04-12-deficit_N… 2/6
— yet.
Because of that, some liberals say deficit reduction should not be the government's Holy Grail, particularly when
unemployment still hovers near 10%.
Spending that benefits future generations should not be sacrificed, they say. It can boost economic growth, which
would makes the debt a lesser percentage of the economy.
"This idea that we're on a precipice and about to fall off a cliff — we're nowhere close to that," says Dean Baker,
co-director of the liberal Center for Economic and Policy Research.
He notes that in Britain, the debt reached more than 200% of the economy after World War II.
Conservatives who have been content with smaller deficits and want to cut rather than raise taxes are less
sanguine now that Obama's budget forecasts an annual deficit still hovering above 5% of the economy in 2020.
"If there was a time for good deficits, that time is long gone," says Andrew Roth, a vice president at the
conservative Club for Growth.
"Deficits are never OK; they're tolerable. And they're not tolerable now."
Moody's Investors Service issued a warning in March that the nation's triple-A credit rating would come under
pressure unless economic growth exceeded projections and tougher actions were taken to tackle the deficit.
A reduced credit rating would cause creditors to demand higher interest rates, raising the cost of borrowing
money. But under Obama's tax and spending proposals, annual deficits would push the public debt to 90% of
the economy by 2020, a level unseen since the years after World War II. Then, it declined steadily for a quarter-
century until bottoming out at 24% in 1974. Now, the retirement of the Baby Boom generation and rising health
care costs project nothing but steady increases.
Congressional Budget Office director Douglas Elmendorf calls the 90% projection "very worrisome." Eventually,
the global economy would be unable to absorb so much U.S. debt, forcing the government to borrow more from
domestic sources of savings.
That would cause interest rates to rise and investment spending to fall leading to "an excruciating set of trade-
offs nobody would want to live through," Orszag says.
"There aren't any easy answers, like cutting waste, fraud and abuse, or growing our way out of it," says Robert
Bixby, executive director of the Concord Coalition, a fiscal watchdog group.
"The problem is much bigger than that."
'Sacrifices and hard choices'
When the Bowles-Simpson commission sits down to business April 27, the choices it will face are grim,
according to the Congressional Budget Office:
•Health care costs are soaring. Medicare and Medicaid will cost more than $800 billion this year, the CBO says.
By 2020, they'll cost $1.5 trillion.
Raising Medicare's eligibility age from 65 to 67 would save $86 billion over 10 years. Raising the premium for
doctors' bills from 25% to 35% would save $217 billion.
That's peanuts compared to what the Treasury Department projects Medicare will owe over the next 75 years:
$38 trillion.
•Solutions are more readily available for Social Security, which costs $715 billion this year, rising to $1.2 trillion in
2020.
William Novelli, a former CEO of AARP, says possibilities include raising taxes or scaling back benefits for high
earners, and increasing the early and regular retirement ages, now 62 and 67.
Linking the annual increase of initial benefits for each new group of retirees to the rise in prices rather than
faster-growing wages would save $195 billion over 10 years, the budget office says.
Raising the retirement age faster, so that it reaches 67 in 2020 rather than 2027, would save $92 billion.
•More savings are available. Canceling the F-35 jet fighter would save $42 billion over 10 years. Reversing the
Army's projected troop increase would save $92 billion.
Slashing highway funding to shore up the Highway Trust Fund, which helps pay for repairs, would save $107
billion.
•Then there are taxes. The biggest revenue boost would come from eliminating the Bush tax cuts passed by
Congress in 2001 and 2003. If all of them were wiped out, the government would collect about $2.8 trillion more
in taxes over the next decade, according to CBO.
Ending the deduction for state and local taxes would raise $862 billion over 10 years.
Limiting the deduction for charitable giving to amounts greater than 2% of adjusted gross income would raise
$221 billion.
A 50-cent gas tax increase would raise $605 billion.
None of those changes would be popular in Congress, which will get the commission's recommendations in
December only if 14 of 18 commission members can agree on anything.
Democratic leaders have pledged votes on any recommendations, but Congress doesn't have to act.
'Benefits are popular'

Previous fiscal commissions produced reports that are gathering dust on government shelves.
There were panels on entitlements in 1994, Medicare in 1999, Social Security in 2001, taxes in 2005.
Their recommendations ranged from rational to radical; none was implemented.
The 1994 panel led by Democratic Sen. Bob Kerrey of Nebraska and Republican Sen. John Danforth of Missouri
laid out the problems facing Medicare, Social Security and other benefit programs, replete with glossy charts.
But in the end, no more than six of the 32 members agreed on any one solution.
"Benefits are popular. Paying for benefits is extremely unpopular," says Danforth, who left the Senate in 1995.
For deficit reduction to succeed, he says, "the public has to get in front of the politicians."
Kerrey, a 1992 presidential candidate and now president of The New School in New York City, says panels such
as the Bowles-Simpson commission can help to create that scenario.
"What you could get is support among the populace for the exceptionally unpopular things you need to do to
solve this problem," he says.
Bowles has been in touch with Microsoft's Steve Ballmer about creating a deficit-reduction video game that would
enable anyone with a computer to take a stab at balancing the budget, much like the 1994 commission did.
Updated for 2010, Kerrey says, such a game could "go viral."
Some analysts say that educating voters isn't enough.
At Third Way, a left-of-center think tank, President Jon Cowan draws on his experience from 1992, when he
helped start a Generation X group called "Lead ... or Leave."
More than 100 congressional candidates, as well as presidential hopeful Ross Perot, signed on to the group's
challenge to halve the federal deficit in four years or retire from Congress. The federal deficit was an issue in
several campaigns that year.
The key now, Cowan says, is to tell lawmakers: "You are in political trouble if you do not deal with it."
Comments: (3,663) Show ing: New est first New : Most recommended!
bellm an (0 friends, send m essage) w rote: 5/11/2010 11:53:36 AM

So the wonder solution to the goverment and people's reckless spending is increased taxes. Im
sorry I dont feel obligated to pay for a war I didn't support under Republicans or Democrats. I'm sorry
Americans took out mortgages on an arm with food stamps but I did not, not my fault I don't owe a
dime. And no I don't own a credit card either. what's needed here is tough love , and I need to give

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U.S.

posts 19th straight monthly budget

(Reuters) - The United States posted an $82.69

(Reporting by Glenn Somerville, Editing by Diane Craft)

May 12, 2010

COMMENTS SEE ALL COMMENTS (244)

Nomorekoolaid Report As Abusive

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mtnecho Report As Abusive

Debt Held by the Public at the

As a Percentage of Gross Domestic Product

Source: Congressional Budget Office.

GDP Price Index

PCE Price Indexa

Consumer Price Index c

Employment Cost Indexe

Deficit (-) or Surplus -513 -521 -534 -641 -684 -5,990

Total 1,226.2 47.1 1,273.3 1,269.9 -3.4 -0.3%

Transportation Obligation Limitations 54.2 0 54.2 54.5 0.2 0.4%

United States public debt

The national debt is presented by the United

As of June 1, 2010, the Total Public Debt

The buildup and involvement in World

Year as % of GDP Debt Held By Public ($Billions) as % of GDP

1910 2.6 unk. 2.6 unk.

1920 25.9 unk. 25.9 unk.

1928 [12] unk. 18.5 unk.

1930 16.2 unk. 16.2 unk.

1940 50.6 52.4 42.8 44.2

1950 256.8 94.0 219.0 80.2

1960 290.5 56.0 236.8 45.6

1970 380.9 37.6 283.2 28.0

1980 909.0 33.4 711.9 26.1

1990 3,206.3 55.9 2,411.6 42.0

2000 5,628.7 58.0 3,409.8 35.1

2001 5,769.9 57.4 3,319.6 33.0

2002 6,198.4 59.7 3,540.4 34.1

2003 6,760.0 62.6 3,913.4 35.1

2004 7,354.7 63.9 4,295.5 37.3

2005 7,905.3 64.6 4,592.2 37.5

2006 8,451.4 65.0 4,829.0 37.1

2007 8,950.7 65.6 5,035.1 36.9

2008 9,985.8 70.2 5,802.7 40.8

2009 12,311.4 86.1 7,811.1 54.6

2010 (est.) 14,456.3 98.1 9,881.9 67.1

2011 (est.) 15,673.9 101.0 10,873.1 70.1

2012 (est.) 16,565.7 100.6 11,468.4 69.6

2013 (est.) 17,440.2 99.7 12,027.1 68.7

2014 (est.) 18,350.0 99.8 12,594.8 68.5

Public and government accounts

Because a large variety of people own the

Fannie Mae and Freddie Mac obligations

Although not included in the figures

Guaranteed obligations excluded

Leading Foreign owners of US Treasury Securities (Feb 2010)

Nation billions of percentage

People's Republic of China (mainland) 877.5 23.4

Japan 768.5 20.5

United Kingdom 233.5 6.2

Oil exporters 218.8 5.8