By Erica Alini - Tuesday, February 5, 2013 - 0 Comments
There are two simple facts about the U.S. deficit that Congress and the media — for all the brouhaha about government debt these days — tend to ignore. The Congressional Budget Office highlighted those two things once again today in its annual forecast on the budget and the economy:
1. The U.S. deficit has been shrinking since 2009.
According to the CBO’s analysis, the deficit in 2013 will be $845 billion, or 5.3 per cent of GDP, which is roughly half the share of GDP it accounted for in 2009.
Now, the actual deficit in 2013 is likely to be larger than that, since CBO projections assume that the enormous spending cuts of the fiscal cliff will actually kick in, whereas it’s likely Congress will choose to cut less. (The cuts are currently set to take effect on March 1 and the CBO always makes its baseline forecasts based on what current law says, not what lawmakers are likely to do.)
That said, the deficit has been declining for the past three years, both in dollar terms and relative to the size of the economy. In 2009, the U.S. deficit was $1.4 trillion. In 2012 it was $1 trillion — still a mind-boggling figure but almost 30 per cent smaller than what it was three years earlier. As a percentage of GDP, last year’s deficit was seven per cent — again very high, but already three percentage points lower than in 2009.
By the editor - Thursday, August 18, 2011 at 10:20 AM - 0 Comments
The real issue is not how to keep credit rating agencies compliant with official thinking, but how to return the American economy to the robust and dynamic powerhouse it has been throughout its history
Prohibitions against shooting the messenger have been forgotten in the midst of the current financial crisis.
Last week Standard & Poor’s credit rating agency expressed publicly what everyone has been thinking for some time: that the United States does not have a credible plan to address its mounting deficit and debt. Net federal government debt as a percentage of GDP is predicted to rise from 74 per cent to 85 per cent by 2021. (Canada is at 34 per cent.) As a result, S&P stripped the U.S. of its AAA credit rating.
Reaction from the White House was furious. Treasury Secretary Tim Geithner said, “S&P has shown really terrible judgment and they’ve handled themselves poorly, and they have shown a stunning lack of knowledge about basic U.S. fiscal math.” Yet any complaint that the rating agency is being too tough on Washington is the height of hypocrisy.
By Jason Kirby - Thursday, January 15, 2009 at 4:40 PM - 17 Comments
The U.S. is on pace to take on $10 trillion in debt over the next decade. What happens when the credit runs dry?
When saddled with debt and short on cash, the best way to cope with testy creditors is to keep your cool and convince them you’re not a deadbeat. President-elect Barack Obama, on the verge of inheriting the world’s biggest IOU, clearly realizes this. He just goes about it with more panache than most.
Last Thursday, at Obama’s urging, outgoing President George W. Bush invited the three living ex-presidents, Bill Clinton, George H. W. Bush and Jimmy Carter, to the most exclusive “eat and greet” on the planet. The extremely rare gathering was billed as a way to remind Americans that their troubled country has weathered storms before, and is in good hands now. But the meeting also aimed to calm frayed nerves among foreign central bankers and other international investors who now hold more than half of America’s debt. After all, they’ve just received yet another nasty reminder of the country’s desperate hunger for cash.