This message struck a chord with US voters, who responded by electing fiscal hawk Republicans into office across the country. A Republican even won the race for Pres. Barack Obama’s old U.S. Senate seat in Illinois.
Voter Perception: 1.3 Trillion in Debt is Too Much
It’s easy to see why voters were attracted to the idea of a smaller government. The U.S. government continues to grow at a seemingly unsustainable pace. And the government expands, it continues to incur debt. The U.S. national debt as of the November 2010 midterm elections was greater than $1.3 trillion. And there were no signs that it was going to drop any time soon.
A closer look at the deficit carried by the U.S. government reveals a startling truth. The country’s debt is certainly at astronomical levels, but so is the United States’ Gross Domestic Product. In fact, in 2010, the U.S. national debt equals only 55.7 percent of the U.S. Gross Domestic Product. Many other countries have debts that consume a much higher percentage of their gross domestic product.
Italy, Jamaica and Greece: Unthinkable GDP
As the infographic attached to this story explains, many countries around the globe are struggling with national debts that surpass their gross domestic product. In other words, these countries do not produce as much as they spend. This problem is more serious than having a high national debt in the first place.
Consider the case of Italy. Italy’s national debt is 106.3 percent of its gross domestic product. Jamaica has a national debt that is 112.9 percent of the gross domestic product, and Greece’s is 114.1 percent.
The simple truth is that countries do not want their debt to exceed their gross domestic product. If the country was a typical household, then these debt ratios mean that more is being spent every month than is being made. The debt will only grow in this scenario.
Estonia a Role Mode of Fiscal Responsibility?
An example of a country where the national debt is not close to the gross domestic product is Estonia. Located in the Baltic region of Northern Europe, the small nation of Estonia has a national debt that is only 4.1 percent of its gross domestic product. However, Estonia’s economy could be better.
The Democratic Republic of the Congo (DRC), located in Central Africa, does Estonia even better. Its national debt is just 0.2 percent of its gross domestic product. However, DRC is rife with lingering conflicts from its twenty five year civil war, massive caches of blood diamonds, and a decaying infrastructure. Furthermore, the former Zaire is a fourth world country. Not exactly the model Western countries want to follow.
GDP Fair Comparisons?
No, these are not fair comparisons. The United States is a first-world superpower that makes and borrows money at a manic pace. Whatever you want to say about Estonia and DRC, you would never classify them as superpowers.
What about other countries that are similar to the United States? How do some of them rank when it comes to their national debts and their gross domestic products?