Column : US CEOs join the deficit debate
One thing clear even to us Indians watching the US debt problem is that the world’s largest economy is on an unsustainable fiscal path. Spending is rising and revenues are falling short, requiring the US government to borrow huge sums each year to make up for the difference. It faces staggering deficits. In 2011, total federal spending was $6.1 trillion, or more than 40% of gross domestic product (GDP) of $15 trillion. Only during World War II was the US federal spending a larger part of the economy. Total direct revenues stood at 32% of GDP in 2011, the lowest level since 1950. The difference of total spending and total direct revenues—federal deficit—was a staggering $1.3 trillion. As of last year, the gross public debt was an overwhelming $17.6 trillion.
Federal debt this high is unsustainable. It is bound to drive up interest rates sooner than later for all borrowers in the US—businesses and individuals—and curtail economic growth by crowding out private investment. That’s one of
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