Is America Going Greek?

The federal deficit of $1.327 trillion for 2012 marks the fourth straight year in which the deficit has exceeded $1.29 trillion.

The U.S. Debt Clock is now above $15.3 trillion, which comes out to just over $49,000 per American, but a whopping $135,776 per taxpayer.  If your family has four taxpayers, your total portion of the federal debt comes out to more than a half million dollars!

The Congressional Budget Office estimates that U.S. debt will double over the next decade to just under $30 trillion, so your family of four will become millionaires in reverse.

That figure does not include the estimated $56 trillion in unfunded obligations that The Peterson Foundation estimates is committed for Medicare and Medicaid, and pension obligations for government workers.  It also excludes trillions in state and local government debt.

Our total debt now exceeds our gross domestic product.  On an annual basis, it has exceeded 24% of GDP for each of the past four years, up from under 19% a decade ago.  At the same time, with a weak economy, tax revenues are below 16% for the fourth consecutive year.

As the chart from The Wall Street Journal shows, America is on target to become the next Greece.

Attempts at austerity measures in Greece have led to widespread rioting with buildings being burned to the ground.  Debt in Greece, Italy and a handful of other European countries had a bigger impact on the U.S. stock market than any other factor last year, even though Greece’s economy is about the size of the economy of the Dallas-Fort Worth area.

What impact will American debt have on the U.S. economy and the world economy when America becomes the next Greece?

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