Saturday, December 08, 2007

Big deals

At CiF, Tim Watkin discusses the massive government debt of the USA.
Really, the facts and figures about America's national debt make horrendous reading. Here's a smattering: It took the US from George Washington to Ronal Reagan to reach its first trillion in debt; When George Bush took office the debt was $5.7bn; when the national debt hits $10bn, probably sometime around the time Bush leaves office in January 2009, the debt clock in New York’s Times Square will not have enough zeroes to register the fact; paying the interest on this debt is now the third largest item on the US budget, behind only retirement and health entitlements and defence.

As Timmy points out, the guy's figures are just a wee bit out.
Out there by three orders of magnitude I think. Trillion, not billion. Still, nice to see that someone is indeed worrying aout the level of US public debt. Like that nice Mr. Bush is, as he’s been gettin te deficit down these past couple of years, hasn’t he?

Don't these people have editors?

And paying for the national deficit is the third largest item on the US national budget? Well, maybe, but our government has also been spending money like water.

Servicing the UK's central government debt, i.e. simply paying the interest, cost £27,424,000,000 in 2006/07 and is estimated to cost £29,100,000,000 in 2007/08 (Table 1.15: 2.1MB PDF).

This makes it the fourth biggest item on our government's budget, beaten only by Health (£88.278 billion), Education and Skills (£61.606 billion) and Defence (£31.890 billion) (Table 1.13 in the PDF above).

Strangely, The Guardian doesn't see fit to compile "horrendous" facts and figures on the Labour government's profligacy: perhaps because it would upset the Guardian Media Group Chairman?

UPDATE: thanks to the commenter who pointed out that Welfare should surely be the biggest item; he is right. Unlike Health, for instance, welfare is split across various departments and schemes (so Tax Credits, for instance, is an entry on its own). However, having hunted through some other Tables, I am pleased to update you all.

The most massive single item is, indeed, Social Security Benefits at £134,463,000,000 for 2006/07 and £140,900,000,000 projected for 2007/08.

When you add up all of the different sections, however, the total figure for benefits is somewhere just north of £200 billion. Just so you know...


Anonymous said...

Wouldn't a fair disclosure of government spending by department / purpose show that welfare is the biggest single item? Is this hidden away on the pretext that it is accomplished through tax credits?

Mark Wadsworth said...

£200 bn seems a tad high, but not far off. So in other words, scrap it and replace it with a Citizen's Basic Income of £60 per week for working age adults (£30 for children, £120 for pensioners) and you'd get the 'cost' down to £180 bn.

Machiavelli's Understudy said...

Perhaps I'm wrong, but the American 'billion' is different to the British 'billion'- I think we have 'X,000,000,000,000', which to the Americans is a 'trillion'.

Of course, if this was his logic, he shouldn't have set the precedent by saying 'trillion' in the first instance.

Budgie said...

The British billion used to be X,000,000,000,000. But we now commonly use the American definitions.

Watch out - we are actually supposed to use the comma as the decimal separator, as they do in the rest of Europe. That is: 1,815m means 1 point 815 metres, not one thousand eight hundred and fifteen miles (or even metres).

Donations of anoraks welcome.

Anonymous said...

I don't suppose the debt figure includes all the PFI spend which is, in reality, just disguised debt

mitch said...

what about pension liabilities for gordons army of organ doners

Rob said...

He also spelled 'ridiculous' as 'rediculous'. Ridiculous, really.

So, horrendous spelling, wrong figures and the whole premise of the article is a shabby, hypocritical lie. A Guardian article, in short.

Mark Wadsworth said...

Mitch, the net present value of that liability is in the region of £1,000 billion (depending on what actuarial assumptions you use) i.e. around 80% of one year's GDP, or £30,000 per taxpayer.

Anonymous said...

No , its more like £1400 billion . The actual official British national debt part of it is the small part . Pension debt is far higher , even than the government admits . And growing .

each time Watson Wyatt , pension experts make an estimate , the British says " far too high" then quietly admits a while later that its a bit on the low side .