The soaring national debt has reached a symbolic tipping point: It’s as big as the economy.
The amount of money the federal government owes to its creditors, combined with IOUs to government retirement and other programs, tops $15.23 trillion.
That’s roughly equal to the value of goods and services the economy produces in a year: $15.17 trillion as of September, the latest estimate. Private projections show the economy likely grew to about $15.3 trillion by December — a level the debt should surpass this month.
“The 100 percent mark means that your entire debt is as big as everything you’re producing in your country,” said Steve Bell of the Bipartisan Policy Center, which has proposed cutting $6 trillion in red ink during 10 years. “Clearly, that can’t continue.”
Long-term projections suggest the debt will continue to grow faster than the economy, which would have to expand by at least 6 percent a year to keep pace. President Obama’s 2012 budget shows the debt soaring past $26 trillion a decade from now. Last summer’s deficit reduction deal could reduce that to $24 trillion.
Many economists, such as the Brookings Institution’s William Gale, said a better measure of the nation’s debt is how much the government owes creditors, not counting $4.7 trillion owed to Social Security recipients and other government beneficiaries. By that measure, the debt is roughly a third less: $10.5 trillion, or nearly 70 percent the size of the economy.
Among advanced economies, only Greece, Iceland, Ireland, Italy, Japan and Portugal have debts larger than their economies. Greece, Ireland, Portugal and Italy are at the root of the European debt crisis. The first three needed bailouts from European central banks; Italy’s books are monitored by the International Monetary Fund.
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