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Why the USA is racking up the debt …

ZeroHedge has an interesting series of 10 charts from Pew Policy Institute demonstrating the dire state of US finances, with the one below showing exactly why the US is in a financial quagmire :

Going from revenue covering expenditure leaving a healthy surplus in 2001 to a shortfall of 9% GDP in 2011 is a spending hole of Brownian proportions.

More disturbing perhaps is the explosion in Government spending which has grown by a full third (in GDP terms) in 10 years.

Viewed in monetery terms, the UK is not that much better at keeping the purse strings tightened (very useful source here) :

For the sake of an apples with apples comparison, UK GDP was £1021 billion in 2001 with spending at £362 billion or 35% of GDP. In 2011, GDP had increased to £1527 billion and spending to £683 billion or 45% of GDP. Whilst only increasing by one quarter in GDP terms over the same period as the US data above, it’s worth noting how much higher government spending is here at 45% of GDP currently compared with 24% in the US.

Do we really get that much more for our money here or is it just the size of the bloated welfare state and National Death Service?

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2 comments to Why the USA is racking up the debt …

  • MarkyMark

    While I don’t doubt that overall Governmental spending to GDP is higher in the US i’m not sure that the comparison figures that you use are entirely fair as the US has a further layer of government compared to the UK [excluding scotland and the EU for the moment] and that is the state governments. State governments in the US tax and spend quite a bit too and their spending would be excluded from that 24%. Also, in the US the local municipalities also tax and spends possibly more than in the UK – eg. New York City is responsible for paying for a lot of sevices (eg police) which would be the responsibility of the national government.

    • Wasp

      MarkyMark – Good point but then the UK also has it’s additional layer of local government whose spending is on top of the total managed expenditure figures given there I believe.

      Council tax of £25 billion and another £25 billion in fees and charges is another 3.3% of GDP taking the 2011 “government” spending up to more or less 50% of GDP – no wonder we are taxed to buggery here. It would be interesting to find out the true figures for the US and UK on a like for like basis – I may have to have a little dig further now and see what lurks beneath.

      Thinking a little more on your point of direct comparisons, there is also the health service which is centrally funded at around 8% of GDP here but largely supported by insurance payments in the US (as far as I know).

      As an aside, I am not sure if you saw the article on council fees and charges at EU Referendum but it makes an interesting read.