First up, adding some context to the U.S. debt:
From the CIA World Factbook, here are the top 50 countries by debt level (as of 2010).
|2||Saint Kitts and Nevis||185|
The United States is actually doing quite well compared to most of Europe and Japan.
Here is some historical context.
**from the Wikimedia Commons
The Federal debt is certainly creeping up, but we are not exactly at unprecedented levels yet.
Second, how bad is the spending?
Federal Spending vs GDP History - from the Wikimedia Commons
Federal Spending History by Category - from the Wikimedia Commons
Although spending in raw dollars is going up, spending as a percentage of GDP has been roughly flat for the past 40 years or so.
And finally, a look at taxes:
Federal Income Tax Rate History - from the Wikimedia Commons
Federal Tax History as a Percentage of GDP - from the Office of Management and Budget
2010/11 saw the lowest tax rates since the 1940's and the lowest taxes as a percentage of GDP since 1950.
In summary, it appears we have both a spending “problem” and a revenue “problem”, however when compared to the rest of the industrialized world, we aren’t doing too bad. The takeaway here is that a long term solution is certainly warranted, but we are not in immediate danger of default as in the case of Greece and other high %GDP countries. Furthermore, attempting to reduce deficits in the middle of an economic downturn is not only difficult, but potentially self defeating. Tax revenues are lower, which is due in part to tax cuts, but also largely to the high unemployment rate. Meanwhile, government spending is up, due in part to political lobbying, but also largely to the high number of people collecting entitlements (because of the high unemployment rate). The best thing we can do for the deficit is to hurry along economic recovery as fast as possible. Doing anything that threatens economic recovery is a very bad idea.
An e xcellent discussion on whether we have a spending problem or a revenue problem can be found here: