American Debt: Is the U.S. Too Big to Fail?

In November, the United States recorded a budget deficit of $150.394 billion, up just over $20 billion for the same month a year earlier and up $10 billion from the month of October 2010. Here, from the Treasury Department, is a chart from theMonthly Treasury Statement for the month of November 2010 showing the monthly deficit situation for the past 14 months:
 
 
Note that the total deficit for the first two months of fiscal 2010 is $290.826 billion, down $5.79 billion or 1.9 percent from $296.65 billion for the first two months of fiscal 2009.  A statistical blip perhaps?
 
Let’s put the $290.826 billion deficit for two months into perspective.  According to the World Bank, the deficit for the first two months alone is greater than the 2009 annual GDP for all but 30 nations in the world.  Among those that have lower GDPs are South Africa ($289.5 billion), Finland ($237.5 billion) and Hong Kong ($215.3 billion).  Don’t forget, that the deficit of $290 billion is for the first two months of the fiscal year alone!  Here’s a chart from the World Bank showing the 2009 GDP numbers for the top 50 nations in the world:
 
 
Let’s put the $290.826 billion into terms that we can relate to.  As I posted earlier, it takes 232.56 one dollar bills to make a one inch thick stack.  For the first two months of fiscal 2010 alone, the Treasury has spent a pile of dollar bills that is 19,785 miles high more than what they’ve take in as revenue.  That distance would take us from Los Angeles to New York City and back four times.
 
Let’s put the deficit into consumer terms.  At a list price of $499 for one of the much coveted Apple iPads, the $290.826 billion would have purchased nearly 583 million iPads, one for every American, Canadian, Japanese and U.K. resident on earth with 50 million to spare (excluding local taxes of course).  At a list price of $28,070 for a Toyota Prius V, the deficit for the first two months of 2010 would have purchased 10.36 million cars and given a real boost to Toyota’s bottom line as an added benefit.  Not to mention Steve Jobs and Apple!
 
All this, and only two months have gone by.  Just think what we’ll be able to buy after 12 months of mounting deficits!
 
The government has turned into the ultimate consumer and a deadbeat one at that.  How long will it be before the world’s financial markets say enough is enough?  The fact that the United States dollar is the world’s reserve currency and is deemed "too big to fail" has postponed its demise but, just like those of us who borrow to purchase our homes, our cars and other consumer goods, eventually the debt has to be paid or the bank forecloses.  
 
…and to think, a deal has just been reached that will cut taxes for the next two years and add another trillion dollars to the overall debt of the country.  Unfortunately, it seems to be easier to cut taxes than it is to slash spending and government waste.

Click HERE to read more of Glen Allen’s columns.

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