US Economy, Government Finances & Debt – The Final Gory Details (IV)

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% of GDP, average debt maturity, baby boomers, budget deficit, Debt/GDP Ratio, European sovereign debt crisi, fiscal cliff, fiscal deficits, Intragovernmental Holdings, Reinhart & Rogoff, Sell in May, Social Security, US Congress, US government finances, US government revenues, US government spending, US Treasury

Continued from here.

Apologies, readers. Deficits left me feeling a little nauseated, I had to take a little breather on this series! In my last post, I highlighted the 2010 total US budget deficit (ignore the primary deficit, it’s irrelevant) was a whopping 8.9% of GDP. In the past half-century, this is the 2nd largest deficit on record (2009 being the winner), but it’s in good company. Nine of every 10 years politicians have outspent revenues, and in 2009-12 the deficit’s expected to consistently exceed $1 trillion (and 7.5% of GDP). It’s no longer surprising how quickly politicians can turn the truly exceptional into the simply mundane…

I think I also sidestepped the quicksand of Republican vs. Democrat debate?! This debate, and their respective philosophies, seem utterly pointless when there’s no credible attempt to eliminate deficits – it’s just moving the deck chairs ’round the Titanic. And deficit rhetoric’s always presented as ‘spending cuts, no tax hikes‘, or vice versa. Such one-sided (and unworkable) solutions are ludicrous – the only sensible solution is a deficit elimination plan based equally on tax hikes & spending cuts.

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US Economy, Government Finances & Debt – Some of the Gory Details (III)

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% of GDP, budget deficit, Democrats, politicians, Republicans, US economy, US government finances, US government revenues, US government spending, US taxes

Continued from here:

Right, in Part II we surveyed US government spending. While spending spiked to 23.7% of GDP in 2010 (the highest since 1946) due to the financial crisis, it otherwise gradually declined over the past few decades to about 19% of GDP in the early 2000s. The decline appears primarily due to decreased defense spending.

We also noted that total US government spending’s among the lowest in the developed world. Despite this, the accompanying decline in tax revenues over the decades now leaves us in a situation where spending’s at 160% of revenues in 2010. What does that mean in terms of the government’s budget deficit and, of course, debt?

US Economy, Government Finances & Debt – Some of the Gory Details (II)

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% of world GDP, EU economy, Euro Area economy, OECD, US economy, US government finances, US taxes

Continued from here:

OK, we’ve looked at US GDP and US government revenues (taxes) so far. The general observation to make is that US taxes have broadly declined as a % of GDP in the past 60 years. This is particularly true of corporate income taxes, despite high headline tax rates. The corporate tax take (as a % of GDP) has declined almost 75% in the same period due to powerful lobbying, more aggressive domestic tax strategies and the booking of v significant profits in low tax overseas subsidiaries. In a global context, the total tax take in the US is among the lowest in the developed world.

So what about government spending..?! Put your gloves on, let’s dig into the guts:

US Economy, Government Finances & Debt – Some of the Gory Details (I)

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% of world GDP, EU economy, Euro Area economy, US economy, US government finances, US taxes

US government finances (and the US economy):  Maybe I’m slow, but I just can’t get an accurate fix on what’s fact or fiction. Everything I read on the web, or hear from our so well informed media, seems to conflict or is agenda-driven, ill-informed or even just plain wrong. And, God forbid, I try my best to pay zero attention to anything emanating from a politician..!

I’ve reached the point where I really need a bit of a sanity check on all this. Why am I focusing on the US government (and economy)? Well, it’s the largest global economy by far, and it affects every one of us around the world in our daily lives (as the financial crisis illustrated in such a ghastly manner) – whither America goes, the rest of the world follows…