We’ve had the discussion here many times about how the national debt is growing at a rate unheard of during any other administration, and we’ve had the doomsayers stating that the debt will lead to disastrous consequences down the road while others have stated that it’s not as bad as all that.
So my question is this: How does our national debt compare to other countries, like France, Germany, Japan, or Great Britain? I’m sure our debt is one of the highest in the world, but how does it compare proportionally to other “World Leading” countries? I ask this because I’m curious to know whether we really are in trouble, or if we’re just average in comparison.
You need to keep in mind there is a crucial difference between deficit (position at a moment in time) and debt (aggregrate position to date). Also “increasing at a record rate” is not necessarily alarming if the base number that is increasing is relatively small. As with the use of all statistics it is very very easy to mislead.
Stop me if I am teaching grandmother to suck eggs but to focus other contribution the following may help.
Governments have different priorities in different years. Sometimes the government is interested in stimulating growth, other times it is interested in reducing spending. These priorities mean that there will be times when the government operates with a deficit or a surplus. A federal deficit occurs whenever the government spends more than it collects in taxes. Federal deficits occur within the government’s annual budget. The federal government ran a deficit each year from 1970 - 1997. The national debt, on the other hand, represents the accumulation of each year’s budget deficit. If the government has a surplus in a year, the surplus could be used to pay down the national debt. To cover the difference in spending more than the government takes in, it borrows the difference from investors in government securities, in the form of Treasury bills, notes, bonds, and certificates. The total amount owed by the federal government to owners of government securities represents our national debt.
on that basis the US numbers are going to wrong way, but do not appear critical to me. Specifically the National Debt is still very managable, although increasing rapidly at the moment. Put on personal terms, if my total debt was less than my annual income I would be a very happy bunny!!
As a related question, I know that there are fairly stringent requirements about national debt and/or deficit to become and stay a member of the European Union and the Euro currency bloc.
Interesting numbers in that link. I don’t pretend to be any kind of economic expert, but it looks like the US debt isn’t out of control. (Not yet, at least.)
I don’t have any numbers but I’ll see what I can do to present a nice little comparison sheet.
I would caution anyone who wants to look it up though that a key methodological point here is that if you’re going to compare government debt, remember to compare all government debt, not just FEDERAL debt. In relatively decentralized federal systems, like the U.S. or Canada, state/provincial governments can rack up prety hefty debts themselves, and in all honesty that’s just as important as fderal debt. I have seen a lot of comparisons made where people compared only FEDERALLY held debt against the debt held by more centralized countries like France or Japan or what have you, which presents a false picture. I’m not sure if notquitekarpov’s link is all government deficits or just federal deficits.
Of course, you also have slippery accounting, but every government probably lies about the same amount.
Quote:
Originally Posted by duffer
Billdo, the EU was conceived as a counterweight to the US economy. The two won’t be tied together for many years, if ever.
I believe the question was hypothetical.
If you understand bollocks, you’ll understand NADS.
I see a question mark, i try to answer it. Sorry, won’t happen again.
Maybe a hijack, but excluding mortgages, is it really considered a good idea to have personal debt anywhere close to annual income?
Mortgages are a special case for individuals, as there are all kinds of tax and other advantages for individuals, and a nation has nothing at all similar.
G8 Country GDP Deficit/Surplus Debt Ratio
Canada $934.1 B +$17.2 B $1.9 B +1.84%
France $1,558 B -$44 B NA * -2.84%
Germany $2,160 B -$23 B NA * -1.06%
Italy $1,455 B -$13 B NA * -0.89%
Japan $3,651 B -$277 B NA * -7.59%
Russa $1,409 B +$12 B $153.5 B +0.85%
UK $1,528 B +$25 B NA * +1.64%
US $10.45 T -$106 B $862 B ** -1.01%
The Fact Book did not these debts listed for one reason or other.
** Debt as of 1995
I’m not sure what, if any thing, this illustrates, but IMHO, Japan’s current problems with interest rates and deflation may be the sort of thing that lies in store for the US.
Sorry to respond to a hijack but why on earth exclude mortgages? Debt is debt. I know it is different in the US, but in contrast for UK homeowners mortgage debt is not tax deductible and generally on variable or short term fixed rates. So it really is the same as any other debt - other than the terms is 25 years and they will lend me up to 3.5 x salary! :eek:
On that benchmark a personal debt to income ratio of less than 100% really would be sweet. Exclude mortgages and sure I would be uncomfortable with anything higher than 25%…
I don’t know about other countries but the deficit-to-GDP ratios for Germany given in the linked page look like those that were the subject of the latest controversy about the Stability and Growth pact. Now these (the numbers triggering warnings and other measures by the European Commission) were combined deficit numbers for all levels (federal/state/municipial), so assuming that like is compared with like the numbers for all countries would be total public deficit/debt.
Mortgage is (theoretically) secured by an asset which retains value independent of future income. Credit card debt, car loans and military spending aren’t !
The major concern with government debt is that it creates an increase in future tax burden. In as much as the interest on debt is paid to lending institutions and bond holders, government debt might even be seen as diverting future spending power away from average taxpayers in favor of the wealthy. Not a recipe for a booming economy.
Question for any economists out there - Is the linear comparison between US government debt and that of more socialist economies valid ? Is the income generated by privatization substantial enough to be relevant in this regard ?
