U.S. Budget Deficit As Big As Canada
Wednesday January 7, 2009
Not as big as the Canadian budget deficit... but, rather, as big as the country of Canada. The New York Times reports:
In other words, it is as if the U.S. Federal government were running a balanced budget, then decided to buy the entire yearly output of Canada - a wealthy country, the world's second largest as measured by landmass, and one with a shade over 33 million people.
And, by the way, that is before the new stimulus package:
Changes in Social Security and Medicare will be central to efforts to bring federal spending in line, President-elect Barack Obama said on Wednesday, as the Congressional Budget Office projected a $1.2 trillion budget deficit for the fiscal year.Canada GDP (PPP): $1.26 trillion (2007)
In other words, it is as if the U.S. Federal government were running a balanced budget, then decided to buy the entire yearly output of Canada - a wealthy country, the world's second largest as measured by landmass, and one with a shade over 33 million people.
And, by the way, that is before the new stimulus package:
If combined with the gigantic stimulus package of tax cuts and new spending that Mr. Obama is preparing, which could amount to nearly $800 billion over two years, the shortfall this year could hit $1.6 trillion.So if buying all of Canada's yearly output was not large enough, the stimulus package will, in addition, buy all of Belgium's output - for two years.
Comments
Wow. Those numbers have grown so big that it’s been hard to put meaning to them. That’s a really good illustration of the scale of the US deficit.
It is interesting to see that everyone – including the finance folks – is talking about large scale spending as the way to fight recession. Great news for now!! At the same time, with potential 1.6 trillion deficit, we also need to think on how this “larger than Canada” budget deficit will be reduced in the future years. Ofcourse, the underlying assumption is that recession will be followed by an economic boom but if my basic math serves me right, US would need to run a few years of surplus budget to start making a dent in these negative numbers. Historical data is running counter to it though as even during the so called boom years from 2001 onwards, US has had large deficits each year and so using the past data to forecast the future trend, it does not look like any time in near future, this accumulated deficit is going to turnaround to a more manageable levels. I would think some time in future, an extraordinary restraint on spending would be required to get back on track. I am wondering about the timing of such restraint?
That’s startling….mind as well ramp up the spending and let tomorrow tomorrow’s generation pay it off
wow and ive been looking for a answer and ive still could never find it!?
Only in Canada? Pity!
That is bad, and consider this if you will, that does not even include the entire cost of the iraqi war, which the democrats will be displaying in the next budget.
What is more concerning is the private sector debt (bad debts) which have been resold as some form of credit to govts, insurance co’s and institions etr who originally saw these as safe investment. Eventually these companies realized these credits wernt so safe and tried to sell them. So haha, when stocks sell more than they buy, the price collapses. Bad debts valued at trillions of dollars in global markets are now devalued causing the global economy to shrink. If you consider the total american private sector debt as well, its something around $550,000 of debt for every american citizen. Whats the cause ? Greedy corporations looking for massive profits and government deregulation. As usual governments have consistentley proven their incapability of responsible economic management. Their has been an active view that the current existing democratic system is used to babysit the people. I think the people need to babysit the government. Both republicans and democrats are responsible for this economic disaster.
Borrowing money happens, it’s what we do with it, that determines our ability to pay it back. We need to tell our government to invest more in USA, to produce products that the world community needs. Put our people back to work. That should be our main goal, because any thing else will not work, only the American people will.