Over the past seven years, our Federal Government has incurred as much debt as it took on in our country’s entire history prior to seven years ago. On April 30, 2004 our government had debt totaling $7.13 trillion. Since 2004 our national debt has basically doubled and is now close to $14.3 trillion. We are bumping against our federally legislated debt ceiling today.
US government debt as a percentage of gross domestic product (i.e. our country’s economic output), hit 62% last year. By 2012 the federal debt level is projected to reach 74% of our economy because of continued budget deficits. Fortunately, we are not close to Greece. Their national debt as a percentage of their economy was 140% in 2010 and is projected to be 160% in 2012. But, our leaders still need to take action soon to keep us from spiraling out of control.
Congress needs to increase the debt ceiling this summer to take default risk off the table. We believe that using our countries hard-earned AAA credit rating as a political bargaining chip is foolhardy. The trust we have built up with our creditors over the past 235 years is too important to the ongoing health of our economy. Making tough decisions regarding spending cuts and revenue raising strategies is the path to follow.
Sources: Treasury Department, Congressional Budget Office, and Eurostat