America’s Looming Debt Crisis Executive MBA George Mason University Spring 2012.

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Presentation transcript:

America’s Looming Debt Crisis Executive MBA George Mason University Spring 2012

Uncle Sam in Debt

Federal Debt: Then and Now September 30, 1991$ 3,665,303,351, Per Person 1991 $14,505 October 11, 2011$14,822,787,487, Per Person2011$47,445

Who Holds U.S. Debt? Debt Held by Public$9.946 Trillion by Foreign Governments $4.499 Trillion Debt Held by U.S. Gov’t$4.669 Trillion Net Debt = Debt Held by Public

Agencies Holding U.S. Debt: Social Security Trust Fund

Agencies Holding U.S. Debt: Federal Reserve Banks

GOVERNMENT AGENCYAMOUNT HELD Social Security Administration$2.6 Trillion Federal Reserve System$1.5 Trillion Medicare$0.5 Trillion Total$4.6 Trillion Agencies Holding Debt (2011)

US Debt Held by Foreign Governments (In $U.S. Billions)

U.S. Debt to GDP Ratio,

U.S. Surplus & Deficit, (In Millions) FY$ $ $ $ $

U.S. Surplus & Deficit, (In Millions) FY$ $ $ $ $

U.S. Surplus & Deficit, (In Millions) FY$ $ $ $

U.S. Surplus & Deficit, (In Millions) FY$ $ $ $ $

Expenditure/GDP

Expenditure-GDP Ratio % % %

Revenue/GDP

Revenue to GDP % %

Government Expenditures 2010 ItemAmount Total Expenditures3,207.7 National Defense International Affairs 51.1 Science, Space, Technology 33.0 Natural Resources & Environment47.0 Agriculture26.6 Transportation106.5 Education142.5 Health372.3 Medicare457.2 Income Security685.9 Social Security721.5 Interest on Debt425.1

Gov’t Expenditures 2010 ($3.2 Trillion)

Government Receipts 2010 (in millions) Item Amount Individual Income Taxes 1,051,431 Social Insurance & Retirement 940,370 Corporate Income Taxes 178,933 Excise Taxes 74,745 Other 87,166 Total Receipts 2,332,645

Revenues (%GDP)

Government Receipts 2010 $(2.33 Trillion)

Debt to GDP Ratio, CBO Projections*

Alternative Projection

Spending Drivers (as a Per Cent of GDP)

Economists Advocating Deficits KeynesKeynesians KrugmanSummers

The Keynesian Logic GDP = C + I + G + (X-M) Marginal Propensity to Consume (MPC) MPC = ΔC ÷ ΔY Δ GDP = Δ G ÷ (1-MPC) (Income Multiplier)

Economists Against Deficits Smith Marx Buchanan Hayek Marx

Reasons Opposed to Deficits 1.Governments default on loans. 2.Wasteful expenditures. 3.Financiers get rich on taxes 4.Financiers influence policy 5.Crowds out private investment 6.Creates trade deficits 7.Burdens future generations

Debt to GDP by Country (EIU Estimates) Japan200%205%209% Greece143%153%154% Italy119%121%121% U.S.* 95% 98% 101% Germany 83% 81% 80% China* 41% 41% 41%

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