The above chart shows the U.S. national debt as a percentage of annual federal government receipts. I like this measure of the national debt because it shows the national debt as it relates to the federal government’s revenues (mainly tax receipts). Based on the Obama Administration’s proposed budget, released last week, the national debt will jump to nearly 600% (six times) the federal government’s annual revenues. Bacially, if the federal government was a corporation, its debt load would be 6x its revenue. That qualifies as extreme leverage. Obviously, the government is not a corporation, but this measure provides an interesting perspective on the government’s ability to pay back the national debt.
Data Sources:
>U.S. Treasury, Treasury Direct
>Bureau of Enonomic Analysis, Table 3.2 Federal Government Current Receipts and Expenditures
>Forecasts are from the Office of Mangement and Budget, A New Era of Responsibility Renewing America’s Promise, Tables S-1 and S-9.
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