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The US Federal Budget Deficit. How much is the
total Debt? What are the short and long-term
effects?  What is the solution? Additional facts.

The debt held by the public, or total accumulated
Federal debt, is expected to be $10.43T by the end of
2011.  This total was $9.02T in 2010.  It’s expected to
be $13.0T by 2014 and $18.3T by 2021. So, even in
2011, Federal debt is 468% of revenue.  By any
standard, that’s a huge debt load relative to income.  
At least it improves to only 378% of estimated
revenue by 2014.  

This does not include intra-governmental debt, which
is debt borrowed by one government entity and held
by another. That is approximately an additional $4T
as of 2011. The biggest example of this is the
approximately $2T borrowed cumulatively from the
Social Security Trust fund by the US Treasury.  This
happens as SS surpluses are invested in US
Treasury securities automatically by law. So by default
SS is lending money to the US Treasury.    

This debt averages to $33,645 for every person in the
US in 2011. It’s $46,129 if the intra-governmental debt
is counted. So it’s at least twice that for the average
family.  The Net Interest on the debt in 2011 us
forecast to be $225B, growing to $394B by 2014.
Higher thereafter. Of course, interest rates are
expected to go higher and this is assumed in the US
budget to some extent.  That Net interest translates
into 10.1% of federal revenues in 2011. That Net
interest translates into 11.4% of federal revenues in
2014.

The US is paying only 2.1% in net interest cost in
2011. How long can that last? They assume they will
pay only 3.0% net interest cost in 2014.

A major underlying cause of the deficit in recent years,
outside of the financial meltdown, has been the
changing demographics of the country. This will
continue and accelerate in the future. The average
age of the population is increasing, and there is a
bulge of baby boomers who will need to be supported
through Social Security and generate higher
expenses through Medicare/Medicaid. The US
population of people 60 and over is forecast to grow
from 18% in 2010 to 26% in 2030.  The overall trend
is for the relative burden on taxpayers to become
greater due to the relative rise of the non-working
population.

In 2011 56.9% of the federal spending is considered
mandatory spending. This includes Social Security,
Medicaid and Medicare programs. Those three
programs alone make up 40.3% of total federal
spending, and they are expected to grow to 43.3% of
the budget by as soon as 2014, and higher
thereafter.  

The other 43.1% of the spending is what is called
discretionary spending. This consists of things like
military spending (25% of total spending), general
government spending 3%,  the Environment and
Energy depts. (3%), and other smaller departments.
.

Click here to go to Part One of The US Federal Debt /
Deficit Crisis.

Click here for Part Two concerning the Federal  Debt /
Deficit Crisis - Conclusion.


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_________________________________________
The US Federal Deficit / Debt Crisis.  
Additional Facts - How Much is the
Deficit and Debt.   
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