July 23, 2010 4:57 PM

National Debt to Top 100 Percent of GDP

By
Mark Knoller
Topics
Economy
(Credit: AP / CBS)

If you could buy stock in the National Debt, do it. It's headed for the moon.

New projections contained in the Administration's Mid-Session Budget Review, show the National Debt doubling between now and the year 2020 when it's forecast to hit over $26 trillion.

The new budget numbers show the Debt will top 100 percent of the nation's Gross Domestic Product, the total output of goods and services, in the year 2012. It'll stay above 100 percent for the remainder of the decade.

The Debt goes up because of compounding by the annual deficits. The Budget Office projects the deficit in this fiscal year will total $1.47 trillion, enormous but not as large as first forecast in February. It'll be $1.4 trillion next year as well, according to the Review.

A sharp decline in the annual deficit is forecast for 2012 when it will sink below the trillion dollar mark for the first time in four years to $911 billion. The deficit will remain in the $700 billion to $800 billion range for rest of the decade and hit $900 billion in 2020.

But most troubling to Administration officials are the unemployment numbers. The new estimates forecast a slow-as-molasses decline in the national jobless rate over the next several years.

Unemployment will average 9.7 percent of the workforce this year, 9 percent next year and 8.1 percent the year after that. It won't fall under 6 percent until the year 2015 when it's projected to average 5.7 percent.

Outgoing Budget Director Peter Orszag says weak economic growth and "persistent unemployment" represent "the most pressing danger" the nation's economy faces.

The GDP numbers remain in positive territory but they are slow to rise. The Review estimates economic growth will average 3.2 percent this year, 3.6 percent next and 4.2 percent in the two years after that.

If nothing else, says Orszag, the numbers are a vast improvement over the negative growth in late 2008 and early 2009 - when he says the economy moved toward outright collapse.

If you're a saver hoping that interest rates might start to climb, they will, but not by much.

The Review forecasts that 91 day Treasury Bills will pay off at 0.2 percent this year, 0.7 percent next and 1.9 percent in 2012. Savers with money in bank accounts have been receiving barely a penny or two on each dollar in their savings accounts for the last couple of years because the Federal Reserve has been keeping the interest rates low in the hope banks will lend money to stimulate the private sector and create jobs.

It hasn't worked out as well as the Administration had hoped.

Mark Knoller is a CBS News White House correspondent. You can read more of his posts in Hotsheet here. You can also follow him on Twitter here: http://twitter.com/markknoller.


Add a Comment
by fedloony July 25, 2010 1:41 AM EDT
The national debt can't even be repaid. It is impossible to pay off debt by borrowing more money! Look at this page. It goes through how it is impossible for the federal government to pay off the huge debt:

http://www.unelected.org/2010/07/24/why-the-national-debt-cant-be-paid-off/
Reply to this comment
by prohb July 24, 2010 12:43 PM EDT
Unemployment at 9.7% - What kind of jobs does that represent? What kind of worker are we talking about?
Reply to this comment
by papayaaaa July 23, 2010 8:14 PM EDT
"I don't know how World War III will be fought, but World War IV will be fought with sticks and stones."

Albert Einstein
Reply to this comment
by RobAla July 23, 2010 8:02 PM EDT
The President and the Democrats who continue to run up the national debt like there is no tomorrow, are outrageously irresponsible! We need a few adults in Washington. We have to seriously begin reducing the federal government to a manageable size, but these people continue to expand it at the expense of businesses and taxpayers.

Regarding the national debt, the main concern is our national debt as it relates to our total GDP. Here is a breakdown:
1980 26.1%
1990 42.0%
2000 35.1%
2001 33.0%
2002 34.1%
2003 35.1%
2004 37.3%
2005 37.5%
2006 37.1%
2007 36.9%
2008 40.8%
2009 54.6%
Estimated for the following years:
2010 67.1%
2011 70.1%
2012 69.6%
2013 68.7%
2014 68.5%

The national debt ratio has been increasing over the last two years at an alarming rate, and we are in trouble if the federal government spending is not reduced dramatically.
Reply to this comment
by pasmalltown July 23, 2010 11:18 PM EDT
by RobAla July 23, 2010 8:02 PM EDT -
----------------------------
About your "estimated" numbers................
"Not everything that can be counted counts, and not everything that counts can be counted." Albert Einstein
by TheMemekiller July 23, 2010 6:55 PM EDT
It seems to me conern over the debt is about preventing the opposing party from spending. The debt exploded under Reagan and Bush, but you didn't hear much from the deficit hawks then because they were spending on GOP priorities.

Clinton created a surplus, which was basically spent by Bush on war and tax cuts. So essentially, the US government did not spend on Democratic priorities so that the GOP would have more to spend on theirs.

The real difference is that right now, deficit spending will actually stimulate the economy. Surpluses should be created in good times, as Clinton did, so we can spend in bad. Unfortunately, Obama took over a debt in bad times.
Reply to this comment
by tsigili July 23, 2010 5:14 PM EDT
That's not so bad. Just look at where we will be by 2020, with Obama locking us into the 13 trillion figure.
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