The Country Ended 2010 With 'Red'.
$13.8 billion debt creates estimated $30k debt per person.
by Antonieta Cadiz
December 29, 2010
Source: La Opinion
Did you know that hypothetically every person in America has a debt on his head close to 30 thousand dollars? That's right. According to latest reports from the Treasury Department, the net national debt reached 13.8 billion dollars in 2010. A figure that surely raise the tone of the discussions in 2011.
This year close as he has accumulated the highest net national debt, accounting for 94% of Gross Domestic Product (GDP). A margin not seen since the late 50's of last century, after the Second World War and full reconstruction of the international balance.
The debt comprises a public portion and a federal debt that is outside and inside the government. The first group includes states, individuals, corporations, reaching $ 9 trillion. The second reflects trust funds like Social Security and Medicare, which accumulates about 4 billion.
In this context, if a calculation is made per person, based on debt service for the people, the 308,745,538 million people in the country should be about 30 thousand dollars each. A debit card is not charged in this, but some economists see as a threat.
"When you have a vibrant economy will always have a little debt and that is considered healthy. The problem is that today debt is so high, it is almost equivalent to the annual GDP," said Pam Villarreal, an expert in economics from the National Center for Policy Analysis.
"To borrow money, the government sells bonds, but they have to pay interest. The economy is not growing and the interest accrues. The debt then becomes bigger and bigger," he said.
A crucial stage was the one that faced countries like Greece this year, when its bonds reached almost to the level of junk debt, due to the bulging public debt, which in 2009 reached nearly 30 billion euros (115% of GDP) . In short, nobody wanted to buy their bonds, since he had no credibility in the market. The result: no money.
"America is in a very dangerous situation. Countries like Greece and Portugal have experienced enormous crisis with lower debt ratios. But beyond the amount, the problem is the rate that is increasing," he said Rudolph Penner, Urban Analyst Institute and former director of the Congressional Budget Office.
In 2007 the net national debt reached 8.9 billion in 2008 and rose to 9.9 billion and in 2009 reached 12.3 billion. Most analysts agree that the causes of the sharp increase in the economic downturn are, in addition to the wars in Iraq and Afghanistan.
However, experts such as Professor James Galbraith, writer and professor of economics at the University of Texas, say there is no cause for alarm. "The size of the debt is only a reflection of the magnitude of the U.S. economy. Historically, the debt has risen and fallen, if not, look at the indices of the decade of the 50" he said.
In Washington, meanwhile, the political discussion has focused on reducing spending. One point that Congress should address sooner rather than later. In fact, the budget for fiscal year 2011, proposed by the Administration last year, has not yet been approved.
In early December, the National Commission on Reform and Accountability voted on its deficit reduction plan of $ 4 billion, but failed to gain the support necessary for consideration in Congress.
When talking about solutions, analysts such as former director of ECLAC, Isaac Cohen, are programs that encourage economic growth as a key factor in reducing the national debt.
"If the economy grows, the debt becomes smaller. The private sector has to re-invest. If we can restore the consumption and employment, there will be progress," he said.
Penner agrees with this view, but also insisted that other changes are needed.
"It needs to reform health care costs, the social insurance system and raise taxes. Politically unpopular measures, but that can be implemented when working with long-term strategy," he said.
Of current trends, the national net debt will reach 19.6 billion dollars in 2015, according to the report that the Treasury Department submitted to Congress by mid-year. This would mean 102% of GDP.