In 2010 annual real GDP was almost $13.249 trillion, according to the Bureau of Economic Analysis. Our national debt is estimated to be at $14.125 trillion. In 2006 the total was $8.43 trillion, or an increase of 60% in that 4 year period. In 2007 the national debt was “only” 65% of GDP. Now it is over 100%..It is important to note that it is estimated that with unfunded liabilities such as social security and Medicare, the actual debt is in the range of $50+ trillion.
The past three years has seen an explosion in deficit spending that has tripled from $458.6 billion in 2006 to $1.41 trillion in 2009. This year is estimated to be $1.56 trillion deficit. Many government reports show deficit as a percentage of GDP, 7% in 1930 growing to over 40 % in 2009, with almost 8% in the years 2007 -2009 increase, the reported debt will be more than our GDP.
Most of us have some debt, a house, car or credit cards. We know that there are two main parts to this. The principal and the interest make up the amount that you have to pay on this debt. According to TreasuryDirect.gov the interest payment in Jan 2011 alone was $21.123 billion. In FY 2010 the total spent on interest was $413.955 billion. According to their figures, since 2000 we have spent $4.13 trillion in interest on the debt while the principal continues to grow.
Now let us look at this way that will be a bit clearer. The government is said to have spent about $3.5 trillion last year and had a deficit of $1.5 trillion. It follows that the actual receipts of the federal government was $2 trillion. This means that the national debt is about 6 times its annual income based on 2010 numbers. If you add the unfunded debts the amount is in the 20-30 times of annual income. That would be equal to a family with an annual income of $150,000 owing from $900,000 (at 6 times income) to $4,500,000 (at 30 times income). For annual spending it would be as if the family had $100,000 to spend but spent $175,000 each year. Clearly this cannot last without a collapse and bankruptcy.
With respect to the $4.12 trillion paid in interest in the past 10 years, who gets all of this money? The holders of the debt, just like your credit card banks, are the recipients of this money. According to US Treasury figures as of October 2010, approximately 33% is held by foreign countries, or $4.31 trillion. The Federal Reserve has $1.1 trillion in US Treasuries. This surpasses even China who holds $896 billion and Japan holding $877 billion. This means that the fed is now the biggest single holder of US Treasuries. So who owns the Federal Reserve? That is tough to say because a Federal Reserve Bank is not a publicly traded corporation and is therefore not required by the Securities and Exchange Commission to publish a list of its major shareholders.
At the rate the government is spending money in deficit a prudent person would believe that we are on a track to collapse. With the knowledge of the debt and annual deficits one would think the government will be working hard to increase income through promotional policies of job growth. However, according to a government report, the Federal Government produces an average of 4,000 final regulations each year with about 500–700 reviewed by the White House. Of those reviewed, between 45 and 75 have significant economic impacts. The Small Business Administration estimates that government regulations cost the economy $1.75 trillion per year, nearly double the amount of individual income taxes collected last year. The Heritage Foundation approximates that 43 rules released in Fiscal Year (FY) 2010 will cost $28 billion annually—a record increase. In FY 2010 only five significant regulations reduced burdens and of those, only two reduced costs for a total savings of $1.5 billion. That is a $26.5 billion net increase in the cost of regulatory burdens in FY 2010. Without action, the cost and burden of regulations will continue to grow in 2011 as agencies further promulgate new rules related to energy, health care and financial services.
These increase costs through regulations, the highest corporate tax in the world and unending fees stifle economic growth in our country. As Tim Murphy put it. “If we want to bring back American jobs, we need to get serious and take action. Our chemical companies, factories, and manufacturing base have left for foreign countries. US steelmaking has declined in the last ten years while China’s has grown by over 350 percent in the same decade.”
The Economic Policy Institute, a Washington think tank, says American companies have created 1.4 million jobs overseas this year, compared with less than 1 million in the U.S. The additional 1.4 million jobs would have lowered the U.S. unemployment rate to 8.9 percent, says Robert Scott, the institute's senior international economist.
It seems the policies are being made to cause a declination in US prosperity rather than growth. As jobs decline and commodities (oil, cotton, metals, corn, etc) increase in price are we on the way to a new depression? Imagine the riots that would break out in this country if that were to happen. It is time to be aware, informed and involved. It is time for we the people to take control once again by being active in watching the government’s actions and talking to your representatives. Encourage your local representatives (in your state) to restrain the out of control demolition of the federal government.