- Jan 7, 2003
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For the first time since World War II, America owes more than it produces—and a leading fiscal watchdog is sounding the alarm | Fortune
“We’ve heard plenty of alarm bells in the past few years about our fiscal path,” said Maya MacGuineas of the CRFB, “but this one rings especially loudly.”
The United States has crossed a grim threshold: The national debt now exceeds the size of the entire American economy. As of March 31, debt held by the public stood at $31.27 trillion, while nominal GDP over the prior 12-month period was an estimated $31.22 trillion—pushing the debt-to-GDP ratio to 100.2%, according to a press release issued Thursday by the Committee for a Responsible Federal Budget (CRFB), based on new data from the Bureau of Economic Analysis.
...The 100% milestone puts the U.S. on a collision course with its all-time high: the 106% debt-to-GDP ratio reached in 1946, in the immediate aftermath of World War II. The difference, MacGuineas argued, is stark. That peak was the result of financing the largest military mobilization in American history. Today’s debt, she said, “isn’t borne from a seismic global conflict, but rather a total bipartisan abdication of making hard choices.”
The Congressional Budget Office warned in February that, under current trajectories, debt held by the public will rise to 108% of GDP by 2030—surpassing the postwar record—and balloon to 120% by 2036. One independent macro model places gross federal debt—a broader measure—even higher, at nearly 126% of GDP by year’s end.
