I think most people understand that the United States has a debt problem, but I am not sure all that many people necessarily understand the magnitude of this debt. According to the treasurydirect.gov website, US federal government debt (as of Monday, February 4) stands at $16.48 trillion (source: http://www.treasurydirect.gov/NP/BPDLogin?application=np)). Since US GDP (as of Q4 2012; see http://bit.ly/kM8cxa) is $15.83 trillion, this implies that the US debt to GDP ratio currently stands at more than 100%.
Using the resources cited in the previous paragraph, one can determine US debt totals and debt to GDP ratios at various points in recent history. On the day that George W. Bush was first inaugurated (January 20, 2001), US federal government debt stood at $5.73 trillion, and the US debt to GDP ratio at the time was 57%. By the time that President Bush’s second term came to an end (on January 20, 2009), US federal government debt had grown by $4.9 trillion (to $10.63 trillion), and the US debt to GDP ratio stood at 74%. Since President Obama first took office on January 20, 2009, US federal government debt has grown by an additional $5.85 trillion, going from $10.63 trillion to $16.48 trillion.
Thus, the Obama administration (after one full term plus two weeks into a second term in office) accounts for 5.85/16.48 = 35.5% of the current national debt, President Bush’s two administrations account for 4.9/16.48 = 29.7% of the current national debt, and the previous 42 presidents cumulatively account for 5.73/16.48 = 34.8% of total US federal government debt.
The graph below (source: http://bit.ly/PxbO63) shows the US debt to GDP ratio over the period 1966-2012. I don’t about y’all, but the fact that this ratio is accelerating as we move through time is very disconcerting. Economists Carmen Reinhart and Ken Rogoff note that episodes in world history where debt ratios exceed 90% are not only rare, but also impede economic growth (see “Debt and growth revisited” (source: http://www.voxeu.org/article/debt-and-growth-revisited)).
Apparently there is a diaspora of rich French citizens surrendering their French passports so as to avoid having to pay a recently passed top marginal income tax rate in France of 75 percent. Quoting from the article accompanying this video, “French Premier Jean-Marc Ayrault said it was pathetic that people move to another country to avoid taxes after a Belgian mayor said that actor Grard Depardieu was moving to Belgium possibly to pay lower taxes.”
From Bloomberg News: According to Aetna Inc.’s chief executive officer, health insurance premiums may as much as double for some small businesses and individual buyers in the U.S. when the Affordable Care Act’s major provisions start in 2014…
Charles Krauthammer writes, “For all the fury and fistfights outside the Lansing Capitol, what happened in Michigan this week was a simple accommodation to reality. The most famously unionized state, birthplace of the United Auto Workers, royalty of the American working class, became right-to-work.”
This is an interesting essay by Bloomberg columnist Josh Barro on how GOP indifference to income inequality, among other things, contributed to the re-election of President Obama. Quoting from the article,
“But the key problem in this debate isn’t that liberals’ ideas are bad, though many of them (especially on trade) are. It’s that conservatives have no serious proposals of their own on rising inequality.”
H/T to my Baylor colleague, economist Steve Green, for pointing this article out to me.
by Sumit Agarwal, Efraim Benmelech, Nittai Bergman, Amit Seru – #18609 (AP CF)
Yes, it did. We use exogenous variation in banks’ incentives to conform to the standards of the Community Reinvestment Act (CRA) around regulatory exam dates to trace out the effect of the CRA on lending activity. Our empirical strategy compares lending behavior of banks undergoing CRA exams within a given census tract in a given month to the behavior of banks operating in the same census tract-month that do not face these exams. We find that adherence to the act led to riskier lending by banks: in the six quarters surrounding the CRA exams lending is elevated on average by about 5 percent every quarter and loans in these quarters default by about 15 percent more often. These patterns are accentuated in CRA-eligible census tracts and are concentrated among large banks. The effects are strongest during the time period when the market for private securitization was booming.
“Obama’s rhetorical blandness conceals an ideological boldness.”
WSJ columnist Kim Strassel writes, “Top marginal income tax rates may go up. But the president’s second-term spending wish list will be history.”