Obama’s 2010 budget will run a 1.5 Trillion deficit. It is estimated that if the government stays on the same course it has been on for the past forty years, the federal government will soon have a $10 trillion budget.

Rob Arnott, wrote in his recent report that “at all levels, federal, state, local GSEs, the total public debt is now at 141% of GDP. That puts the United States in some elite company--only Japan, Lebanon and Zimbabwe are higher. That’s only the start. Add household debt (highest in the world at 99% of GDP) and corporate debt (highest in the world at 317% of GDP, not even counting off-balance-sheet swaps and derivatives) and our total debt is 557% of GDP. Less than 3 years ago our total indebtedness crossed 500% of GDP for the first time.”

If you add the unfunded portion of entitlement programs you arrive at 840% of GDP.

Some point to Japan as evidence that a high debt-to-GDP level (227%) is not so bad.
But we need to point out that

• Japan’s recession is now 19 years old. 
• The Fitch rating agency is considering downgrading Japan’s debt.
• Japan’s stock market is still down 75% from the high in 1990 and some predict it will slide into 2010.
   

California alone constitutes about 13% of America’s GDP. Its current-year budget hap is approximately $6B and that gap is anticipated to grow to $14.4B next year. It is no surprise that the State of California is currently rated Baa1 and unless the state executes a solid plan to address these budget gaps in a timely fashion, alarming credit deterioration could result, according to economist David R. Kotok of Cumberland Advisors.

We should all be concerned with both the national debt and the growing burden to service it.

Interesting Thoughts - What is a Trillion anyway? According to 10077.com it is a 1 followed by 13 zeros; if you placed one dollar bills end-to-end the chain would stretch between the earth and the moon 200 times; a military jet traveling at the speed of sound would have to be airborne 14 years to unwind a trailing roll of one dollar bills.