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The CBO Will Need A Bigger Chart To Forecast Exponentially-Rising US Debt

Tyler Durden's picture





 

Courtesy of previous Zero Hedge disclosures, namely that the CBO has been in the past both perpetually and grossly overoptimstic (their 2001 forecast of 2011 public debt was negative $2.4 trillion; instead the real number was positive $10.4 trillion, a delta of only $12.8 trillion) as well as explicitly biased by political and financial interests as exposed by whistleblowers, are two things most of our readers are well aware of. What they however may not know, is that when it comes to the most recent forecast of US public debt as released hours ago, the CBO has officially run out of charting space. As can be seen on the graphc below, sometime in 2042 the CBO will need a bigger chart to represent US public debt as per the Extended Alternative Fiscal Scenario, which the CBO itself admits "
is more representative of the fiscal policies that are now (or have recently been) in effect than is the extended baseline scenario.
" And it is to this off-the-chart line that Keynesian lunatics want to add MORE debt? Actually why not, it is not as if the US will ever repay any of these exponentially-rising obligations.

Here is how the CBO presents the only somewhat realistic outlook:

The Extended Alternative Fiscal Scenario

 

The budget outlook is much bleaker under the extended alternative fiscal scenario because of the changes in law that are assumed to take place. The changes under this scenario would result in much lower revenues and higher outlays than would occur under the extended baseline scenario.

 

In particular:

  • Almost all expiring tax provisions are assumed to be extended through 2022. Specifically, for this scenario, CBO assumed that the cuts in individual income taxes enacted since 2001 and most recently extended in 2010, which are now scheduled to expire at the end of calendar year 2012, would be extended; relief from the AMT for many taxpayers, which expired at the end of 2011, would be extended; the 2012 parameters of the estate tax (adjusted for inflation) would continue to apply, preventing increases in rates and in the share of assets that is taxable; and all other expiring tax provisions (with the exception of the current reduction in the payroll tax rate for Social Security) would be extended.
  • After 2022, revenues under this scenario are assumed to remain at their 2022 level of 18.5 percent of GDP, just above the average of the past 40 years.
  • This scenario also incorporates assumptions that through 2022, lawmakers will act to prevent Medicare’s payment rates for physicians from declining; that after 2022, lawmakers will not allow various restraints on the growth of Medicare costs and health insurance subsidies to exert their full effect; that the automatic reductions in spending required by the Budget Control Act will not occur (although the original caps on discretionary appropriations in that law are assumed to remain in place); and that, as a percentage of GDP, federal spending for activities other than Social Security, the major health care programs, and interest payments will return to its average level during the past two decades (rather  than fall significantly below that level, as it does under the extended baseline scenario).

Under those policies, federal debt would grow rapidly from its already high level, exceeding 90 percent of GDP in 2022. After that, the growing imbalance between revenues and spending, combined with spiraling interest payments, would swiftly push debt to higher and higher levels. Debt as a share of GDP would exceed its historical peak of 109 percent by 2026, and it would approach 200 percent in 2037.

 

Many budget analysts believe that the extended alternative fiscal scenario is more representative of the fiscal policies that are now (or have recently been) in effect than is the extended baseline scenario. The explosive path of federal debt under the alternative scenario underscores the need for large and timely policy changes to put the federal government on a sustainable fiscal course.

Luckily, even the CBO is now hedging its bets:

Catastrophic Events or Major Wars

 

Natural and manmade disasters occur fairly often, and even though they may have significant short-term effects on the national economy or long-term effects on certain regions or economic sectors, they rarely have a lasting impact on the national economy. However, an increased frequency of disasters or the occurrence of a catastrophic event could affect budgetary outcomes by reducing economic growth over a number of years or requiring massive additional federal spending, or both. For example, the country could experience more-frequent severe floods, hurricanes, tornadoes, and fires—as some models of climate change predict—or a single massive earthquake, a nuclear meltdown that rendered a large area of the country uninhabitable, or an asteroid strike. Other possibilities include an epidemic (whether on the scale of the 1918 pandemic flu, which killed roughly one out of every 150 people in the United States, or on the scale of the current AIDS epidemic in parts of Africa), a series of major terrorist attacks, a large war, or a number of smaller but sustained wars. Because estimates of future risk are generally based on experience and catastrophic events are extremely rare, estimating the probability of their future occurrence is very difficult.

Let's see here: "It was all World War III's fault".... wink wink.

Source: CBO

 


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Tue, 06/05/2012 - 18:36 | Link to Comment RationalPrepper
RationalPrepper's picture

Accurate to within +/- 250%?  Not bad...not bad at all, CBO.

Tue, 06/05/2012 - 18:42 | Link to Comment SHEEPFUKKER
SHEEPFUKKER's picture

Debt Slaves R US. 

Tue, 06/05/2012 - 18:45 | Link to Comment iDealMeat
iDealMeat's picture

I see a hockey stick..

Tue, 06/05/2012 - 18:46 | Link to Comment SHEEPFUKKER
SHEEPFUKKER's picture

Stanley's Cup

Tue, 06/05/2012 - 19:09 | Link to Comment AssFire
AssFire's picture
The CBO Will Need A Nigger Chart To Forecast Exponentially-Rising US Debt

Oh, my bad...damn subliminal shit.

Tue, 06/05/2012 - 19:19 | Link to Comment Muppet Pimp
Muppet Pimp's picture

The degree of change that BO has brought to us is becoming awfully difficult to believe in. 

Tue, 06/05/2012 - 21:14 | Link to Comment francis_sawyer
francis_sawyer's picture

WHAT THE HELL??

Tue, 06/05/2012 - 21:57 | Link to Comment entropos
entropos's picture

Fuck you. 

Tue, 06/05/2012 - 19:17 | Link to Comment Harbanger
Harbanger's picture

Life sucks, but there's hope.  Walker wins AGAIN! No thanks to the babbling bitchez that stand on the sidelines complaining..

Tue, 06/05/2012 - 20:38 | Link to Comment Harbanger
Harbanger's picture

Any babbling bitch that needs a reaming is welcome to respond.

Tue, 06/05/2012 - 21:42 | Link to Comment tarsubil
tarsubil's picture

Sorry, I don't swing that way. Perhaps you're at the wrong site?

Tue, 06/05/2012 - 22:46 | Link to Comment Harbanger
Harbanger's picture

That's silly, please don't waste my time, it's limited.  Ask or challenge me and I'll give you a thruthful answer.

Tue, 06/05/2012 - 20:59 | Link to Comment max2205
max2205's picture

Problem is one can't believe their baseline OR historical data.

BS

Tue, 06/05/2012 - 19:29 | Link to Comment world_debt_slave
world_debt_slave's picture

I AM world_debt_slave

Tue, 06/05/2012 - 18:46 | Link to Comment reTARD
reTARD's picture

Somehow the words Congress and Budget do not mesh.

Tue, 06/05/2012 - 19:06 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

I would like to direct ZHer attention to the phrasing used.  

Debt is always worded as a % of GDP.  This is to attempt to define government size to be appropriate to GDP rather than population.  Population is NOT baselined to grow at 3-4%, and GDP is.  This subtle little manifestation of verbal bullshit then can be tossed into arguments as JUSTIFYING bigger government until you have two civil servants per non government employee citizen.

And that's to say nothing of the possibility that oil scarcity will define negative growth on GDP for most of the outyears in question.  Toss that in and watch those %s flap their wings upward.

Tue, 06/05/2012 - 19:20 | Link to Comment The Grip
The Grip's picture

Correct again CIO, the nanny state exited the barn some time ago. Are you familiar with the term "benefits navigator?" It's like a personal assistant, or a life coach, but helps those with a substantial portfolio of "workers" keep track who is in charge of which benefit. These positions exist today.

Tue, 06/05/2012 - 19:42 | Link to Comment Muppet Pimp
Muppet Pimp's picture

That is precisely how the US dems and EU socialists are trying to frame the debate.  They are creating the false dichtomy that you can either have growth (funded by more .gov debt) or you can have lower taxes and no growth.  They completely leave out that with this "Growth" comes EU taxation rates stateside which kill private sector growth which they plan to make up with even more .gov debt, until such time that .gov snuffs out private industry.  No doubt as .gov taxes and regulates industry right out of business, the inevtitable nationalizations will occur.  You don't have to know much about Obama to realize he would be delighted with such a plan.

Tue, 06/05/2012 - 23:34 | Link to Comment FreedomGuy
FreedomGuy's picture

Good point. I would say the same thing about Social Security and Medicare. Increases in benefits are not tied to tax revenues. Social Security can get inflation or statutory increases that have no relationship whatever to the revenue stream. Wouldn't we all love private plans and pay raises that are not tied to company revenues? Government and elected officials are never restrained by reality, mathematics or fiduciary responsibility.

Wed, 06/06/2012 - 05:29 | Link to Comment eclectic syncretist
eclectic syncretist's picture

Another point is that debt should be properly graphed as negative numbers on all these graphs.  No one, not even ZH, thinks to question that the gov always graphs debt as if it's an asset.

Tue, 06/05/2012 - 18:50 | Link to Comment stocktivity
stocktivity's picture

OK...I'll admit this has nothing to do with the coming depression BUT...if you want to see something totally amazing -

http://www.flixxy.com/hubble-ultra-deep-field-3d.htm

Tue, 06/05/2012 - 19:06 | Link to Comment evolutionx
evolutionx's picture

HYPERINFLATION WILL DRIVE GOLD TO UNTHINKABLE HEIGHTS

We now live in a world where governments print worthless pieces of paper to buy other worthless pieces of paper that combined with worthless derivatives, finance assets whose values are totally dependent on all these worthless debt instruments. Thus most of these assets are also worth-less.

More

http://www.mmnews.de/index.php/english-news/7063-hyperinflation-will-drive-gold-to-unthinkable-heights

Tue, 06/05/2012 - 19:07 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

Yeah, that's what ZH needs.  More bold font hype of gold.

Tue, 06/05/2012 - 23:38 | Link to Comment FreedomGuy
FreedomGuy's picture

I agree in principle but there are two great forces at work. The inflationary monetizing and leveraging of ever more debt. This is combined with the excellent ability of governments to crash an economy making money more valuable in the short term. It is the classic inflation vs. deflation argument. I think in the long run inflation wins because it does all the things governments want, like defaulting on debt and creating hidden tax increases. In the short term, however, the economies of the world are anemic and frail. Money is in demand at these times of deleveraging in the private sector.

Wed, 06/06/2012 - 02:16 | Link to Comment Debugas
Debugas's picture

those worthless pieces of paper are not worthless - they are backed up by indebted citizens' labour

Tue, 06/05/2012 - 19:11 | Link to Comment The trend is yo...
The trend is your friend's picture

"we're gonna need a bigger boat"

JAWS

"we're gonna need a bigger chart"

CBO

Tue, 06/05/2012 - 22:09 | Link to Comment CompassionateFascist
CompassionateFascist's picture

By 2042 the "CBO" and all other alphabet agencies of the ZOG will be long gone. Budgets will be local only. Very, very local.

Tue, 06/05/2012 - 18:36 | Link to Comment mossme89
mossme89's picture

My stack just got a little shinier...

Tue, 06/05/2012 - 19:14 | Link to Comment donsluck
donsluck's picture

Um, if it's shiny, it's actually brass. Gold is rather dull. Better xray those bars.

Tue, 06/05/2012 - 18:38 | Link to Comment q99x2
q99x2's picture

Can computers handle those numbers or is this going to be another Y2K event.

Tue, 06/05/2012 - 18:45 | Link to Comment NotApplicable
NotApplicable's picture

Perhaps they can define a new unit of measure that automatically increases over time to compensate?

Tue, 06/05/2012 - 18:52 | Link to Comment Irwin Fletcher
Irwin Fletcher's picture

Yes, most likely, but the CBO statisticians will probably need an extra few mil to rescale the y-axis on that chart.

Tue, 06/05/2012 - 19:23 | Link to Comment Rynak
Rynak's picture

Don't worry, 64bit will fix that...... reaches up to 18.446.744.073.709.551.616
 mucha room for zeroes. Now, if the CBO has 64bit software.... that is another question.

And if this isn't enough - a lot of financial software uses a so called "bignum" system, in which numbers in theory can be as large as the entire memory of the computer.......

....unfortunatelly, to use this to the full extend for QE66666666666666^666, we'll have to build a screen as large as the solar system. On the other hand, we also would need to extend life expectancy to a few million years for someone having enough time to read that number.

Tue, 06/05/2012 - 19:44 | Link to Comment Muppet Pimp
Muppet Pimp's picture

+1

excellent back o the napkin analysis Rynak

Tue, 06/05/2012 - 19:45 | Link to Comment Irwin Fletcher
Irwin Fletcher's picture

The use of big numbers in financial software arises less from large amounts of money and more from looking for patterns in multi-dimensional financial data.

Tue, 06/05/2012 - 18:38 | Link to Comment drink or die
drink or die's picture

This will stimulate the economy by forcing people to buy larger monitors to view the graphs.

Tue, 06/05/2012 - 18:41 | Link to Comment John Wilmot
John Wilmot's picture

I'll take the asteroid please..

Tue, 06/05/2012 - 18:40 | Link to Comment kraschenbern
kraschenbern's picture

Logarithmic scaling on the vertical axis will, at least in the near term, solve the chart space overrun problem.

Tue, 06/05/2012 - 18:43 | Link to Comment NotApplicable
NotApplicable's picture

While flattening the chart, to boot. A true win-win!

Also, this is bullish for the chart-making software industry.

Tue, 06/05/2012 - 18:42 | Link to Comment Normalcy Bias
Normalcy Bias's picture

Anyone that believes this country will exist under it's current form of Govt in 2042 is seriously mentally deficient and/or acutely psychotic.

Tue, 06/05/2012 - 18:45 | Link to Comment kill switch
kill switch's picture

2014

Tue, 06/05/2012 - 18:45 | Link to Comment NotApplicable
NotApplicable's picture

"This is the dawning of the Age of Aquarius..."

Tue, 06/05/2012 - 18:47 | Link to Comment John Wilmot
John Wilmot's picture

I wonder what the population of the N. American continent will be in 2042, and how much of it will have been "rewilded" already. Let's see, they can fit quite a few Rio + douches conferences in between now and 2042, so my guess would be "far less than now" and "most of it."

Tue, 06/05/2012 - 20:06 | Link to Comment The Watchman
The Watchman's picture

What's a Govt?

Tue, 06/05/2012 - 18:49 | Link to Comment junkyardjack
junkyardjack's picture

All we know for sure is that their projection is 100% wrong

Tue, 06/05/2012 - 18:49 | Link to Comment Bunga Bunga
Bunga Bunga's picture

They forgot the zombie attack in the safe harbor statement.

 

 

Tue, 06/05/2012 - 18:52 | Link to Comment NeedleDickTheBu...
NeedleDickTheBugFucker's picture

It's comforting to know that debt held by the public will be reduced to zero in only 57 years (2069) under the CBO's Extended Baseline Scenario.  Stay the course!

Tue, 06/05/2012 - 18:51 | Link to Comment LetThemEatRand
LetThemEatRand's picture

I'll take Things That Make Me Puke Blood for One Quadrillion, Alex.

Tue, 06/05/2012 - 19:23 | Link to Comment Burticus
Burticus's picture

TTMMPB fer one quad, an' you got...the daaaaaiiily derivative!!! 

That means you can leverage your quadrillion FeRNs 100 to 1, even if you don't have that many to bet, and if you lose more than the audience's re-re-re-hypothecated collateral, we'll baaaaaaaiiiilll your @$$ out!

Tue, 06/05/2012 - 18:57 | Link to Comment michaelsam9
michaelsam9's picture

wwiii is the bridge between running out of justifications for qe and creating enough money to easily pay off the trade deficit in gold by 2015 (as Jim Sinclair predicts)

 

Tue, 06/05/2012 - 19:04 | Link to Comment Rynak
Rynak's picture

Hey folks, i've created a 3rd scenario, which i call WTF -> LOL (meaning WTF triggering LOL):

http://i46.tinypic.com/2rn76uf.png

You can do it too! Everyone can draw lines, and claim that it represents something someday sometime possibly in the future under very strict conditions matching things in our heads.

Tue, 06/05/2012 - 21:53 | Link to Comment tarsubil
tarsubil's picture

This thread is killing me. Good stuff. You're alright.

Tue, 06/05/2012 - 19:02 | Link to Comment Dr Paul Krugman
Dr Paul Krugman's picture

What this graph fails to show is that at one point the economy will have recovered and we can begin to issue less debt and pay down what it took for a recovery.  We all know we are in a recession - how have we gotten out of all recessions before?  We created growth by using future revenue now.  If you fail to grow now, then there is no future.

If we create growth now then in the future we issue less, making that graph correct and sustaining a manageable debt load.  But I see that the spirit is to be a pessimist and imagine the worst, instead of being an optimist and taking the bull by the horns and riding it into the sunrise.

We need to remember we have a future, as long as we work towards it.  If we had been doing more all along we would not be here, yet here we are, so let us do what we must to save our future.

Tue, 06/05/2012 - 19:05 | Link to Comment Rynak
Rynak's picture

Welcome MDB2.

Tue, 06/05/2012 - 21:17 | Link to Comment francis_sawyer
francis_sawyer's picture

Is that kind of like the logic that if we invade Iraq, the oil revenues will pay for the operation?

Wed, 06/06/2012 - 14:30 | Link to Comment Rahm
Rahm's picture

LMAO, a troll gets plagerized!  Classic shit right here!!!

http://www.zerohedge.com/contributed/2012-06-06/einstein-wrongabout-fed#...

Tue, 06/05/2012 - 19:07 | Link to Comment bnbdnb
bnbdnb's picture

Of course, growth is unlimited, resources are unlimited, and hopium is unlimited. What a douche.

Tue, 06/05/2012 - 19:17 | Link to Comment nmewn
nmewn's picture

You did everything but wave the flag...lol.

Tell ya what "Doctor"...divest yourself of your beach house on VI...and your Manhattan apartment and your other several properties & assets in order to bring yourself down to the middle class to which you pretend to speak for.

Then come back and we'll talk rationally.

Tue, 06/05/2012 - 20:34 | Link to Comment Harbanger
Harbanger's picture

What? Can you even begin to imagine a "middle classs" owning a Beach house, a City Apt., and some income producing  properties?  Yes.  "Believe it or not" that was actually quite attainable and not uncommon by "middle class" Americans. 

Tue, 06/05/2012 - 20:59 | Link to Comment nmewn
nmewn's picture

Not so long ago either.

Tue, 06/05/2012 - 20:56 | Link to Comment dolph9
dolph9's picture

The only ass Krugman is interested in saving is his own.  He's got a reputation to protect.

May you rot in hell, Keynesian boomer.  History will not treat you kindly.

Tue, 06/05/2012 - 19:02 | Link to Comment Everybodys All ...
Everybodys All American's picture

"Getting rid" of some of your citizens solves alot of those pesky Social Security and Medicare funding problems. It's a crazy world where people actually think this way.

Tue, 06/05/2012 - 19:09 | Link to Comment Seasmoke
Seasmoke's picture

its never a good idea, to be worth more dead than alive

Tue, 06/05/2012 - 19:10 | Link to Comment FieldingMellish
FieldingMellish's picture

What difference does it make if the interest on debt is near zero or negative? I mean, what could possibly go wrong? Right? right? Oh my...

 

PS: They left out the Rapture as a possible "thinning out" event. Although, I think fewer people would get taken than they think.

Tue, 06/05/2012 - 19:09 | Link to Comment Hedgetard55
Hedgetard55's picture

No wonder I drink heavily every night.

Wed, 06/06/2012 - 00:10 | Link to Comment ElTerco
ElTerco's picture

Is it working?  Maybe I should try that.

Tue, 06/05/2012 - 19:13 | Link to Comment homer8043
homer8043's picture

So what you're saying is that if there's an asteriod strike, the debt to GDP will not be -32% in 2087. Now I have a plan.

Tue, 06/05/2012 - 19:22 | Link to Comment yogibear
yogibear's picture

Bernanke, Yellen, Dudly and the rest of the Federal Reserve US debt enablers will help double down on the debt.

Debt ceiling after debt ceiling being broken. Like Jack in the beanstalk. We are going for a target of 30 trillion. US unfunded liabilities are already unpayable.

The US credit rating needs to drop again.

Tue, 06/05/2012 - 19:23 | Link to Comment JohnKozac
JohnKozac's picture

'Supersize' the chart!

...and pass me the fries and burger while you're at it....

Tue, 06/05/2012 - 19:24 | Link to Comment djsmps
djsmps's picture

According to an article on CFBC, the US debt could double in 25 years,

Tue, 06/05/2012 - 19:34 | Link to Comment ebworthen
ebworthen's picture

"It may or may not be partly sunny tomorrow."

I think they forgot the Yellowstone Caldera blowing up and making a majority of farmland unplantable for 2-3 years at least; but if we can ignore unfunded liabilities that are more likely to explode I guess an asteroid will do.

Tue, 06/05/2012 - 19:35 | Link to Comment Winston Smith 2009
Winston Smith 2009's picture

We won't come remotely close to 2042 before debts reset (as they should) through cascading worldwide defaults, so they can stick with their current chart scale.

Tue, 06/05/2012 - 20:09 | Link to Comment dwdollar
dwdollar's picture

Fifteen years ago it was boom times. What will it be like fifteen years from now? It's scary to think about. One could be optimistic and say things will be booming again, but where is the evidence for that? The same megalomaniac morons who got us into this mess are still in charge. Nothing has changed.

Tue, 06/05/2012 - 19:38 | Link to Comment GreatUncle
GreatUncle's picture

Agree the debt will never be repaid.

It is not the done thing under Keynesian economics. What will happen though the poorest 50% will be devalued into poverty to service the ever increasing interest on the debt.

Everywhere demand is contracting but prices are rising suggests to me also that the inflationary rate is disconnected from demand and now largely governed by government spending.

Now does the investment contradiction economists go on about start to make sense? The disconnect where even with all the market chaos values are rising because the numerical value of government borrowing with associated spending is driving it.

Tue, 06/05/2012 - 19:43 | Link to Comment yogibear
yogibear's picture

" the US debt could double in 25 years,"

Like the BLS and their BS unemployment rate. Only counting those that are on unemployment insurance. I know so many with masters degrees in technical fields that are either unemployed or under employed. 

The CBO is full of it. How much of our debt is being refinanced? How long did it take for us to get from 8 trillion to almost 16 trillion?  

How many baby boomers are retiring every day? Is there a Social Security trust fund or just IOUs? There is no trust fund. 

As Bernanke keeps devaluing the US dollar and taxes go up to pay for the huge public pensions people will have less disposible income. With global wage arbitration wages continue to fall, except if your a CEO with a 20% yearly increase.

Too many people worldwide and not enough jobs.

 

 

 

Tue, 06/05/2012 - 20:19 | Link to Comment SDRII
SDRII's picture

but liesman said we can print another 3 trillion? What gives? Who exactly is chewing down our debt . Watch those Caribbean banking centers what with Japan & china trade deficits (surplus shrink) & petrodollars going flaccid 

 

Tue, 06/05/2012 - 20:02 | Link to Comment dwdollar
dwdollar's picture

Isn't funny how the "alternative" is more likely correct whether it's alternative news or alternative fiscal scenarios...

 

<sarc>

IMO "alternative" isn't scary enough to keep the sheep asleep. Instead, it should be labeled "terrorist", "crackpot", etc...

In the terrorist news today....

-or-

The crackpot fiscal scenario projects...

</sarc>

Tue, 06/05/2012 - 20:24 | Link to Comment Cabreado
Cabreado's picture

"Catastrophic Events or Major Wars
Natural and manmade disasters occur fairly often..."

Dear CBO,

Asteroids... really?

And you left out a defunct Congress, the real and catastrophic manmade disaster that is here and now?

Tue, 06/05/2012 - 21:01 | Link to Comment BlackholeDivestment
BlackholeDivestment's picture

...LMAO, talk about telegraphing the punch and spiking it too. 

http://www.youtube.com/watch?NR=1&feature=endscreen&v=OpXP8abAv_w

Tue, 06/05/2012 - 21:11 | Link to Comment Stimulati
Stimulati's picture

It's all right there. Our taxes on the rich are too low and our private health care system is broken. Fix those and our budget problems go away.

Tue, 06/05/2012 - 22:23 | Link to Comment JohnG
JohnG's picture

DOOM, bitchez.

Got Gold?

Tue, 06/05/2012 - 22:44 | Link to Comment JeffB
JeffB's picture

They're not using "Total Public Debt Outstanding". "Held by the Public" is a subset of the total debt and leaves out a lot.

 

If you count total debt, it was already more than 100% of GDP by the end of the 1st quarter 2012.

 $15,582,078,681,188.70  Total Public Debt Outstanding 3-30-12  Gov't Debt to the Penny - U.S. Treasury

$15,454,000,000,000.00  U.S. GDP as of 2012 1st Q US Dept of Commerce Bureau of Economic Analysis

Therefore Debt / GDP = 100.83% per my calculations

 

Tue, 06/05/2012 - 23:04 | Link to Comment the night watchman
the night watchman's picture

Debt-to-GDP is not a good measure of repayment ability for one simple reason - the federal government doesn't have the use of GDP to repay its debt - it can only repay debt from its own revenues – measured by the ‘debt-to-revenue’ ratio.  Since GDP has grown much faster than federal revenues (revenues have actually been virtually flat for 10+ years) the ratio of debt to GDP has increased much more slowly than debt-to-revenue (the real measure).   Quoting debt as a percentage of GDP is not only more or less irrelevant, it conceals both the magnitude and urgency of this nearly-unsolvable situation.  

The U.S. Federal debt is now seven times its total annual revenue.  Federal revenues have grown 8% since 1999 but the debt has tripled (read that again, slowly, if it didn’t scare the heck out of you)!  Each year for at least the past three years we have added another $1.2 trillion or more to the debt.  In order to balance the Federal budget (which would simply mean breaking even – not paying back nor adding a penny of debt), we would have to either raise taxes or cut federal spending (or some combination of the two) by 39% (in fiscal 2010, the government spent $3.6 trillion but took in only $2.1 trillion).  The political will to propose, and the practical ability to pass, such legislation is unimaginable (think: riots, civil war, etc. - Greece is seeing a huge revolt in response to relatively small austerity measures which would look like a Sunday picnic compared to the U.S. cutting 39%).

 

Wed, 06/06/2012 - 05:46 | Link to Comment justsayin2u
justsayin2u's picture

Why dont we call it the federal mortgage so people can look at it like they do when the buy a house?  And we ought to add in the intra governmental obligations like medicare/aid and soc sec commitments so we get a true sense of just how well our masters are managing the national business.

Wed, 06/06/2012 - 01:22 | Link to Comment d2themfi
d2themfi's picture

When you are getting this directly from the CBO itself, you know the govt is completely fucked.

Wed, 06/06/2012 - 01:27 | Link to Comment George Orwell
George Orwell's picture

Do you know how much of that debt we can repudiate by a preemptive nuclear attack on China coupled with an invasion and occupation of Saudi Arabia?  I bet a big chunk.

 

The only way you are going to have $2.50 a gallon gasoline to haul your fat American asses around town in a SUV is by wiping out China and occupying much of the Middle East.  Shale Oil?  Tar Sands?  Solar?  Wind?  Natural Gas? Please, get real.  We consume about 19 million barrels of oil per day and most of that is imported.  Does your SUV run on electric motor or compressed natural gas engine?  Yeah I didn't think so either.  Those engines are just not manly or American.

 

Nuke China, India, Pakistan, Bangladesh, Nigeria, Indonesia, to preserve the American Way Of Life.  To spread freedom and democracy.



 


Wed, 06/06/2012 - 05:41 | Link to Comment eclectic syncretist
eclectic syncretist's picture

George Orwell my ass, you've got to be a big banker.

Wed, 06/06/2012 - 01:58 | Link to Comment OldPhart
OldPhart's picture

Bet a nickle that the Government switches to logrithmic charts around 2020.

Wed, 06/06/2012 - 05:49 | Link to Comment Grand Supercycle
Grand Supercycle's picture

Previous USDX retracement & SPX rally warning is now confirmed & good (counter trend) equity upside expected.

http://www.zerohedge.com/news/2012-12-24/market-analysis

Wed, 06/06/2012 - 06:21 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

Slow ahead, Hoopah.

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