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Monday 31st of August 2009
August 25, 2009    

US national debt to hit $1.6tn

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by Kay Murchie
US national debt to hit $1.6tn

The White House and Congress have both warned that the US Government budget deficit will surge to almost $1.6 trillion (£978 billion) this year - the highest level ever recorded.

Furthermore, the White House is forecasting that the deficit will grow to $9 trillion over the next decade - a rise of $2 trillion from its previous estimate.

The rise has been driven by President Obama’s $787 billion stimulus package, implemented to see the world’s largest economy through the worst economic downturn in decades.

“Overall, it underscores the dire fiscal situation that we inherited, and the need for serious steps to put our nation back on a sustainable fiscal path,” the White House’s Office of Management and Budget director Peter Orszag said.

However, despite the growing debt, the US economy is expected to start to recover this year.

Christina Romer, one of the president’s economic advisers, said the White House is now forecasting that the US economy will shrink by 2.8% in 2009 - double its forecast earlier this year.

It is now forecasting growth of 2% in 2010, less than its previous prediction of 3.2%, but with economic growth recovering to 3.6% in 2011.

In other news today, it has been reported that US consumer confidence rose in August.

The closely-monitored Consumer Confidence Index from the Conference Board business organisation grew to 54.1 from an upwardly revised 47.4 the previous month.

The latest reading exceeded market expectations but it is still well below the 90 mark - the minimum level associated with a healthy economy. Anything above the 100 mark indicates strong growth.

The Index is closely watched as personal spending accounts for more than two-thirds of US economic activity.

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1 Comment »

  1. The solution to our national debt lies in real health care reform:

    We would need a bit more than $900 billion per year to fully fund a US version of the British National Health Service (universal health care).

    How to pay for the US National Health Service? In 2007, the combined Federal, State, and local government expenditure on health care was $1035.7 billion. So, we can fully nationalize health care with the US National Health Service, and cut government health care spending by about $100 billion per year at the same time. No additional tax source is needed. Now $100 billion is not that significant, in relation to our $10+ trillion national debt - but by adopting a US National Health Service, we eliminate the need for private health care expenditures. Adopting a US version of Britain’s National Health Service will free up more than $1.2 trillion per year in funds no longer needed to pay for private health care expenditures. This money should be collected in the form of increased taxes, and used to pay down the (largely Republican-incurred) national debt - the national debt could be fully paid off within ten to fifteen years, if this is done.

    The bottom line is that we are already paying for universal health care, we just aren’t receiving it.

    /Data from: the Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group; U.S. Dept. of Commerce, Bureau of Economic Analysis; the U.S. Bureau of the Census; and the UK NHS

    Comment by AC — August 25, 2009 @ 9:09 pm

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