Why Germany Should Preserve Its public Debt Brake and the US Should Adopt One

Recommendable! See also my today's chart of the day blog post!

Compare to e.g. the Eurozone debt threshold of 60% of GDP. Beyond 60% was considered fiscally imprudent and risky! Of course, the Eurozone debt threshold was ignored by the many, ever so crafty, big spending politicians.

Yes, debt and debt financing limits are long overdue to constrain the always profligate spending culture of the U.S. Congress!

"... By 2019, Germany’s debt-to-GDP ratio had dropped to a manageable 60 percent, a significant improvement from the heights reached during the global financial crisis [ended 2009]. ... 

Meanwhile, the United States faces a ballooning debt crisis, with public debt just shy of 100 percent of GDP at $28 trillion ($35 trillion if you add in debts owed primarily to Medicare and Social Security) and projected to rise sharply in the decades ahead. ..."

Why Germany Should Preserve Its Debt Brake and the US Should Adopt One | Cato at Liberty Blog

Fitch downgrades US credit rating to AA+ from AAA

This is big and very bad news for the U.S. This is real true Bidenomics! What do you expect when the U.S. government debt has grown to over 120% of GDP!

There is a senile, demented, and corrupt and clueless 46th President!

The treasury secretary Janet Yellen has been a mediocre economist all her life and acts more like a grandma kowtowing before Chinese officials and so on ...

One more sign that America has turned into a banana republic!

President Trump Urgently Needs To Adress Runaway National Debt

Posted: 12/13/2018

Trigger

U.S. federal debt keeps on rising to unsustainable levels and it has been doing so under President Trump as well.

President Trump Made Some Progress Towards Stabilizing Or Reducing Debt

President Trump’s rescission request in May 2018 to the U.S. Congress of $15.4 billion was a valiant effort and it was a much appreciated step in the right direction, but far from enough. Unfortunately, the chronically foolish Democratic Party failed again by voting it down in the U.S. Senate in June 2018.

Trump also proposed to reform federal government employee salary and contributions so that employees pay more for their lavish benefits. A very welcome reform! (Source 4, 5)

I believe, there were more proposals by Trump to reduce federal expenditures.

A Brief Summary

U.S. National Debt has:

1. Tripled since 2000 to now $21.5 billion, while GDP less than doubled
2. Relative to GDP, national debt climbed from a very benign 55% in 2000 to over 100% of GDP in 2017. Only good news is that in 2016 and 2017 it stabilized at about 104%.
3. Among all OECD countries, the U.S. ranks 5th in terms of highest debt to GDP ratio (in 2015; latest available data), only surpassed only by countries like Portugal, Greece, Italy, and Japan. This is really bad!
4. The high national debt of the U.S. and other OECD countries is the major reasons why central banks have kept interest rates at extremely historical low levels for over a decade or otherwise the government net interest payments to service national debt would have become explosive
5. Obama added about $10.6 billion or roughly $1.3 billion per year in office. Had Obama and the Democrats not willfully prolonged and exacerbated the Great Recession, this dramatic increase in national debt would not have occurred
6. Trump has added so far less than about $2 billion or less than $971 billion per year in office

Here are the hard and very unpleasant facts (in $ billions):

Year	Nominal GDP	Debt	Debt Increase	Debt/GDP
2018		$21,516	$1,271
2017	$19,485	$20,245	$671	104%
2016	$18,707	$19,573	$1,423	105%
2015	$18,219	$18,151	$327	100%
2014	$17,522	$17,824	$1,086	102%
2013	$16,785	$16,738	$672	100%
2012	$16,197	$16,066	$1,276	99%
2011	$15,543	$14,790	$1,229	95%
2010	$14,992	$13,562	$1,652	90%
2009	$14,449	$11,910	$1,885	82%
2008	$14,713	$10,025	$1,017	68%
2007	$14,452	$9,008	$501	62%
2006	$13,815	$8,507	$574	62%
2005	$13,037	$7,933	$554	61%
2004	$12,214	$7,379	$596	60%
2003	$11,458	$6,783	$555	59%
2002	$10,936	$6,228	$421	57%
2001	$10,582	$5,807	$133	55%
2000	$10,252	$5,674		55%

Sources:

1. Treasury Direct Historical Debt Outstanding – Annual
2. BEA NIPA Table 1.1.5. Gross Domestic Product
3. OECD Data General government debt
4. Trump Proposals Would Cost Federal Employees, Retirees above $143 Billion
5. Trump thanks federal employees with $143.5 billion in retirement cuts