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Jan Lokpal Bill

From Wikipedia, the free encyclopedia The Jan Lokpal Bill, also referred to as the citizens' ombudsman bill, is a proposed independent anti-corruption law in India. Anti-corruption social activists proposed it as a more effective improvement to the original Lokpal bill, which is currently being proposed by the Government of India.[1] The Jan Lokpal Bill aims to effectively deter corruption, redress grievances of citizens, and protect whistle-blowers. If made into law, the bill would create an independent ombudsman body called the Lokpal (Sanskrit: protector of the people). It would be empowered to register and investigate complaints of corruption against politicians and bureaucrats without prior government approval.[2][3][4] In 2011, civil activist Anna Hazare started a Satyagraha movement by commencing an indefinite fast in New Delhi to demand the passing of the bill. The movement attracted attention in the media, and hundreds of thousands of supporters, in part due to the organizational skills of Arvind Kejriwal.[5] Following Hazare's four day hunger strike, Indian Prime Minister Manmohan Singh stated that the bill would be re-introduced in the 2011 monsoon session of the Parliament.[6] Accordingly, a committee of five Cabinet Ministers and five social activists attempted to draft a compromise bill merging the two versions but failed. The Indian government went on to propose its own version in the parliament, which the activists rejected on the grounds of not being sufficiently effective, and called it a "toothless bill".[7]

Contents
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1 Background 2 Key features of proposed bill 3 Difference between government and activist drafts o 3.1 Highlights o 3.2 Details 4 Timeline of Lokpal and cost 5 Campaign for the Jan Lokpal Bill o 5.1 Fast & Agitation Phase 1 o 5.2 Drafting Committee o 5.3 Fast & Agitation Phase 2 o 5.4 Notable supporters and opposition 6 Criticisms of the bill o 6.1 Nave approach o 6.2 Extra-constitutional o 6.3 Scope o 6.4 Criticism from Aruna Roy, Arundhati Roy and NCPRI 7 Support for the Bill o 7.1 Surveys

7.2 Legislator support 7.3 Social media 7.4 Online surveys 8 Parliamentary actions on the proposed legislation 9 See also 10 References 11 External links

o o o

Background
The word Lokpal was coined in 1963 by L.M.Singhvi, a Member of Parliament during a debate in Parliament about grievance redressal mechanisms. His son Dr. Abhishek Singhvi is now the head of the Parliamentary Standing Committee reviewing the bill.[8] The prefix Jan (translation: citizens) was added to signify the fact that these improvements include input provided by "ordinary citizens" through an activist-driven, non-governmental public consultation.[9][10] The Lokpal bill was first introduced by Shanti Bhushan in 1968[11] and passed the 4th Lok Sabha in 1969. But before it could be passed by Rajya Sabha, Lok Sabha was dissolved and the bill lapsed.[12] The Subsequent versions were re-introduced in 1971, 1977, 1985, 1989, 1996, 1998, 2001, 2005 and in 2008,[13] but none of them passed. The bill was inspired by the Hong Kong Independent Commission Against Corruption (ICAC).[14][15]

Key features of proposed bill


Some important features of the proposed bill are:[9] 1. To establish a central government anti-corruption institution called Lokpal, supported by Lokayukta at the state level. 2. As in the case of the Supreme Court and Cabinet Secretariat, the Lokpal will be supervised by the Cabinet Secretary and the Election Commission. As a result, it will be completely independent of the government and free from ministerial influence in its investigations. 3. Members will be appointed by judges, Indian Administrative Service officers with a clean record, private citizens and constitutional authorities through a transparent and participatory process. 4. A selection committee will invite short-listed candidates for interviews, videorecordings of which will thereafter be made public. 5. Every month on its website, the Lokayukta will publish a list of cases dealt with, brief details of each, their outcome and any action taken or proposed. It will also publish lists of all cases received by the Lokayukta during the previous month, cases dealt with and those which are pending. 6. Investigations of each case must be completed in one year. Any resulting trials should be concluded in the following year, giving a total maximum process time of two years. 7. Losses caused to the government by a corrupt individual will be recovered at the time of conviction.

8. Government officework required by a citizen that is not completed within a prescribed time period will result in Lokpal imposing financial penalties on those responsible, which will then be given as compensation to the complainant. 9. Complaints against any officer of Lokpal will be investigated and completed within a month and, if found to be substantive, will result in the officer being dismissed within two months. 10. The existing anti-corruption agencies (CVC, departmental vigilance and the anticorruption branch of the CBI) will be merged into Lokpal which will have complete power and authority to independently investigate and prosecute any officer, judge or politician. 11. Whistleblowers who alert the agency to potential corruption cases will also be provided with protection by it.

Difference between government and activist drafts


Highlights
Difference between Jan Lokpal Bill and Draft Bill 2010[16] Jan Lokpal Bill (Citizen's Draft Lokpal Bill (2010) Ombudsman Bill) Lokpal will have powers to initiate Lokpal will have no power to initiate suo motu action or suo motu action or receive receive complaints of corruption from the general public. complaints of corruption from the It can only probe complaints forwarded by the Speaker of general public. the Lok Sabha or the Chairman of the Rajya Sabha. Lokpal will have the power to Lokpal will only be an Advisory Body with a role limited initiate prosecution of anyone to forwarding reports to a "Competent Authority". found guilty. Lokpal will have police powers as Lokpal will have no police powers and no ability to well as the ability to register FIRs. register an FIR or proceed with criminal investigations. Lokpal and the anti corruption wing of the CBI will be one The CBI and Lokpal will be unconnected. independent body. Punishments will be a minimum Punishment for corruption will be a minimum of 6 of 10 years and a maximum of up months and a maximum of up to 7 years. to life imprisonment.

Details
The following table details differences between the Government and activist backed versions.[17][18][19] Comparison SlideShow uploaded by India Against Corruption.[20] Issue Prime Minister The Jan Lokpal Bill[10] Government's Lokpal Bill[1] PM can be investigated with PM can be investigated by permission of seven member Lokpal Lokpal after she/he vacates bench.[17] office.[21]

Judiciary

Can be investigated, though high level members may be investigated only with permission of a seven member Lokpal bench.[17]

Judiciary is exempt and will be covered by a separate "judicial accountability bill".[18]

Can be investigated, but their Can be investigated with permission conduct within Parliament, such Conduct of MPs of seven member Lokpal bench.[17] as voting, cannot be investigated.[18] All public servants would be Only senior officers (Group A) Lower bureaucracy included.[18] will be covered.[18] Anti-corruption The Anti-corruption wing of the wing of the Central The Anti-corruption wing of the CBI CBI not be merged into the will be merged into the Lokpal.[18] Bureau of Lokpal.[17] Investigation (CBI) Any person can bring a complaint to Any "aggrieved party" can raise a complaint to the President, Removal of Lokpal the Supreme Court, who can then members and Chair recommend removal of any member who will refer the matter to the to the President.[17] CJI.[17] Complaints against Lokpal staff will be handled by independent boards Lokpal will conduct inquiries Removal of Lokpal set-up in each state, composed of into its own behaviour.[17] staff and officers retired bureaucrats, judges, and civil society members.[17] All state anti-corruption Lokayukta and other local/state antiagencies would be closed and corruption agency would remain in Lokayukta responsibilities taken over by place.[18] centralised Lokpal.[18] No protection granted to Whistleblower Whistleblowers are protected by whistleblowers by Lokpal Lokpal.[17] protection Mahima.[17] Lokpal can either directly impose Lokpal can only refer matters to penalties, or refer the matter to the the courts, not take any direct Punishment for courts. Penalties can include removal punitive actions. Penalties from office, imprisonment, and corruption remain equivalent to those in recovery of assets from those who current law.[17] benefited from the corruption.[17] Lokpal can obtain wiretaps ( to make Lokpal can issue contempt a connection to a telegraph or orders, and has the ability to telephone wire in order to obtain punish those in contempt. No Investigatory information secretly), issue rogatory authority to obtain wiretaps, powers letters, and recruit investigating issue rogatory letters, or recruit officers. Cannot issue contempt investigating officers.[17] orders.[17] Lokpal can issue fines for frivolous Court system will handle matters of frivolous complaints. Courts False, frivolous and complaints (including frivolous complaints against Lokpal itself), can give 25 years vexatious with a maximum penalty of Rs imprisonment and fines of Rs complaints 100,000.[17] 25,000 to 200,000.[20]

NGOs

NGOs not within the scope due to their role in exposing corruption.[19]

NGOs are within the scope and can be investigated.[19]

Timeline of Lokpal and cost


1968 Rs 3 lakh[22] (300,000) 1971 Rs 20 lakh (2 million) 1977 Rs 25 lakh (2.5 million) 1985 Rs 25 lakh 1989 Rs 35 lakh (3.5 million) PM under lokpal 1996 Rs 1 crore (10 million) PM under lokpal 2001 Rs 1.5 crore (15 million) PM under lokpal 2011 Rs 1700 crore[22] (17 billion)

Campaign for the Jan Lokpal Bill

Lokpal activist Anna Hazare Main article: 2011 Indian anti-corruption movement The first version of the Lokpal Bill drafted by the Government of India in 2010 was considered ineffective by anti-corruption activists from the civil society.[23] These activists, under the banner of India Against Corruption, came together to draft a citizen's version of the Lokpal Bill later called the Jan Lokpal.[23] Public awareness drives[24] and protest marches[23] were carried out to campaign for the bill. However, public support for the Jan Lokpal Bill draft started gathering steam after Anna Hazare, a noted Gandhian announced that he would hold an indefinite fast from 5 April 2011 for the passing of the Lokpal/Jan Lokpal bill.[6][25][26]The government has however accepted it. To dissuade Hazare from going on an indefinite hunger strike, the Prime Minister's Office directed the ministries of personnel and law to examine how the views of society activists can be included in the Lokpal Bill.[27] On 5 April, the National Advisory Council rejected the Lokpal bill drafted by the government. Union Human Resource Development Minister Kapil Sibal then met social activists Swami Agnivesh and Arvind Kejriwal on 7 April to find ways

to bridge differences over the bill.[28] However, no consensus could be reached on 7 April owing to several differences of opinion between the social activists and the Government.

Fast & Agitation Phase 1


On 7 April 2011 Anna Hazare called for a Jail Bharo Andolan (translation: Fill jail movement) from 13 April to protest against Government's rejection of their demands.[29] Anna Hazare also claimed that his group has received six crore (60 million) text messages of support[30] and that he had further backing from a large number of Internet activists. The outpouring of support was largely free of political overtones; political parties were specifically discouraged from participating in the movement.[31] The fast ended on 9 April, after 98 hours, when the Government accepted most demands due to public pressure. Anna Hazare set an 15 August deadline for the passing of the bill in the Parliament,[32] failing which he would start a hunger strike from 16 August. The fast also led to the Government of India agreeing to setting up a Joint Drafting Committee, which would complete its work by 30 June.[32]

Drafting Committee
The drafting committee was officially formed on 8 April 2011. It consisted of the following ten members, including five from the government and five drawn from the civil society.[33][34] Member Qualifications and status Pranab Mukherjee Finance Minister, Co-Chairman Shanti Bhushan Former Minister of Law and Justice, Co-Chairman P. Chidambaram Minister of Home Affairs Veerappa Moily Minister of Corporate Affairs Minister for Communications and Information Technology Kapil Sibal Salman Khursid Minister of Law Anna Hazare Social Activist Prashant Bhushan Lawyer N. Santosh Hegde Former Lokayukta (Karnataka) and Arvind Kejriwal RTI Activist. The Government's handling of the formation of the draft committee, involving the civil society in preparation of the draft Lokpal bill, was criticised by various political parties including BJP, BJD, TDP,AIADMK, CPI-M, RJD, JD(U) and Samajwadi Party.[35][36] The committee failed to agree on the terms of a compromise bill and the government introduced its own version of the bill in the parliament in August 2011.[37]

Fast & Agitation Phase 2


However, the Joint Drafting Committee failed to reach a conclusion and the five members of the Government on the panel came up with their own version of the bill, which was considered by Anna and his team as weak and will facilitate the corrupt to go free apart from several other differences. To protest against this, Anna Hazare announced an "Indefinite Fast"

(not to be confused with "Fast unto death"). Anna and his team asked for permission from Delhi Police for their fast and agitation at Jantar Mantar or JP Park. Delhi Police gave its permission with certain conditions. These condition were considered by team Anna as restrictive and against the fundamental constitutional rights and they decided to defy the conditions. Delhi Police imposed sec 144 CrPC.[38][39] On 16 Aug, Anna Hazare was taken into preventive custody by Delhi Police. Senior officers of Delhi Police reached Anna Hazare's flat early in the morning and informed him that he could not leave his home. However, Hazare turned down the request following which he was detained.Anna in his recorded address to the nation before his arrest asked his supporters not to stop the agitation and urged the protesters to remain peaceful.Other members of "India Against Corruption", Arvind Kejriwal, Kiran Bedi and Manish Sisodia were also taken into preventive custody. Kiran Bedi described the situation as resembling a kind of Emergency (referring to the Emergency imposed in 1975 by the Indira Gandhi Govt.).[39] The arrest resulted in huge public outcry and under pressure the government released him in the evening of 16 Aug. However, Anna Hazare refused to come out of Jail, starting his indefinite fast from Jail itself. Manish Sisodia explained his situation as, "Anna said that he left home to go to JP Park to conduct his fast and that is exactly where he would go from here (Tihar Jail). He has refused to be released till he is given a written, unconditional permission". Unwilling to use forces owing to the sensitive nature of the case, the jail authorities had no option but to let Anna spend the night inside Tihar. Later on 17 Aug, Delhi Police permitted Anna Hazare and team to use the Ramlila Maidan for the proposed fast and agitation withdrawing most of the contentious provisions they had imposed earlier.[40] The indefinite fast and agitation began in Ramlila Maidan, New Delhi, and went on for around 288 hours (12 days from 16-August-2011 to 28-August-2011)[41]. Some of the Lokpal drafting committee members became dissatisfied with Hazare's tactics as the hunger strike went on for the 11 th day: Santosh Hegde, a member of Hazare team who headed the Karnataka Lokayukta, strongly criticised Hazare for his insistence of "having his way", concluding I feel I am not in Team Anna any more by the way things are going. These (telling Parliament what to do) are not democratic things.[42] Swami Agnivesh, another central figure in the Harare group also distanced himself.[43]

Notable supporters and opposition

Union HRD Minister Kapil Sibal, a notable critic of the citizens' version of the Bill In addition to the activists responsible for creating and organising support for the bill, a wide variety of other notable individuals have also stated that they support this bill. Spiritual leaders Sri Sri Ravi Shankar[44] and Yog Guru Ramdev[45] expressed support. Notable politicians who indicated support for the bill include Ajit Singh[46] and Manpreet Singh

Badal[47] as well as the principal opposition party, Bharatiya Janta Party.[48][49] In addition, numerous Bollywood actors, directors, and musicians publicly approved of the bill.[50][51][52][53][54][55][56][57] Notable opposition to the activists' version of the Bill was expressed by HRD minister Kapil Sibal and other Congress leaders; Chief Minister of West Bengal Mamta Banerjee; Punjab Chief Minister and Akali Dal leader Prakash Singh Badal; Shiv Sena leader Bal Thackeray, and former Chief Justice of the Supreme Court Jagdish Sharan Verma.[58] Although BJP showed their support earlier, there were reports that BJP shared Congress's concern "over letting the civil society gain the upper hand over Parliament in lawmaking".[59] The All-India Confederation of SC/ST Organisations, representing the Dalits and backward castes, also expressed opposition to the bill proposed by Anna Hazare as well as to the government's version of the bill. The confederation opposed Hazare's proposed bill saying that it will be above the constitution and that proposers of the bill have support from elements who oppose reservation.[60]

Criticisms of the bill

Pro-bill activitist Arvind Kejriwal

Nave approach
The bill has been criticised as being nave in its approach to combating corruption. According to Pratap Bhanu Mehta, President of the Center for Policy Research Delhi writes[61] that the bill "is premised on an institutional imagination that is at best nave; at worst subversive of representative democracy". The very concept of a Lokpal concept has received criticism from HRD minister Kapil Sibal in that it will lack accountability, be oppressive and undemocratic.[62]

Extra-constitutional

The pro-bill activist Arvind Kejriwal rejects the claim of Lokpal being extra-constitutional with the explanation that the body will only investigate corruption offences and submit a charge sheet which would then tried and prosecuted through trial courts and higher courts, and that other bodies with equivalent powers in other matters exist. The proposed bill also lists clear provisions for the Supreme Court to abolish the Lokpal.[63] Despite these clarifications, critics feel that the exact judicial powers of LokPal are rather unclear in comparison with its investigative powers. The bill[64] requires "...members of Lokpal and the officers in investigation wing of Lokpal shall be deemed to be police officers". Although some supporters have denied any judicial powers of Lokpal,[65] the government and some critics have recognised Lokpal to have quasi-judicial powers.[66] The bill also states that "Lokpal shall have, and exercise the same jurisdiction powers and authority in respect of contempt of itself as a High court has and may exercise, and, for this purpose, the provisions of the Contempt of Courts Act, 1971 (Central Act 70 of 1971) shall have the effect subject to the modification that the references therein to the High Court shall be construed as including a reference to the Lokpal."[67][68][69] Review of proceedings and decisions by Lokpal is prevented in the bill by the statement "...no proceedings or decision of the Lokpal shall be liable to be challenged, reviewed, quashed or called in question in any court of ordinary Civil Jurisdiction.". As a result, how the trials will be conducted is unclear in the bill, although the bill outlines requiring judges for special courts, presumably to conduct trial that should be completed within one year. The critics hence express concern that, without judicial review, Lokpal could potentially become an extra-constitutional body with investigative and judicial powers whose decisions cannot be reviewed in regular courts.[70]

Scope
The matter of whether the Indian Prime Minister and higher judiciary should or should not be prosecutable by the Lokpal remains as one of the major issues of dispute. Anna's own nominee for co-chairing the joint panel Justice Verma, the former Chief Justice of the Supreme Court, has expressed his constitutional objections for including the Prime Minister and higher judiciary under Lokpal.[71] According to him, "this would foul with the basic structure of the constitution".[72]

Criticism from Aruna Roy, Arundhati Roy and NCPRI

Critic Aruna Roy

Magsaysay Award winner Aruna Roy who has said "Vesting jurisdiction over the length and breadth of the government machinery in one institution will concentrate too much power in the institution, while the volume of work will make it difficult to carry out its tasks". She and her colleagues at the National Campaign for People's Right to Information (NCPRI) have proposed an alternative mechanism consisting of five institutions.[73] Noted author and social activist Arundhati Roy was highly critical of Lokpal, stating "you could say that the Maoists and the Jan Lokpal Bill have one thing in common they both seek the overthrow of the Indian State", and "While his means may be Gandhian, Anna Hazare's demands are certainly not. Contrary to Gandhiji's ideas about the decentralisation of power, the Jan Lokpal Bill is a draconian, anti-corruption law, in which a panel of carefully chosen people will administer a giant bureaucracy,.."[74][75][76]

Support for the Bill


Surveys
India Against Corruption conducted a referendum on Draft Lokpal Bill presented by the Indian Government in parliament and came out with results that showed overwhelming opposition to the Government's bill. As per the referendum results, 85% of the citizens participating in the referendum voted against the government's version of the bill. The team especially cited the results from the Chandni Chowk constituency, which happens to be the constituency of Telecom Minister Kapil Sibal, a vehement voice for the Government's version of the bill.[77][78] According to a nationwide survey conducted by CNN-IBN & CNBC-TV18 and published in early August, only a shade over a third of respondents have heard of Lokpal. Thirty-four percent of all respondents said they have heard of the ombudsman and only 24 percent know what it actually means.[79] One of the key Anna Hazare associate who is also one of the drafters of the Jan Lokpal Bill Prashant Bhushan has demanded a nation wide referendum on Jan Lokpal Bill to gauge the mood of the nation.[80]

Legislator support
Post the massive support to Anna Hazare's movement, several of the MPs across party lines have come out in support to the Jan Lokpal Bill. Most notable names are Congress MPs from Maharashtra Priya Dutt and Datta Meghe.[81][82] Datta Meghe also demanded that his party spokesperson Manish Tiwari should apologise to Anna Hazare for his uncharitable comments.[81] This support started coming as over 150 MPs and Ministers from different states were forced to remain confined to their houses as Anna supporters protested outside their houses. Protests were also seen outside the residence of Sheila Dixit CM of Delhi, Kapil Sibal, Pranab Mukherjee amongst others.[81][82][83] BJP MP Varun Gandhi is introducing Jan Lokpal Bill as a private member's bill in the parliament.[84]

Social media
As per the reports, Anna Hazare's fast was successful in mobilising the support of thousands in the virtual world of social media. On Independence Day, Anna had over 500,000 mentions through status updates and comments across top social networking sites, including Facebook and Twitter in the country. Two days later, the number had shot up to 9 million.On YouTube, over 40,000 people watched the video shot by Kiran Bedi inside Tihar Jail in which Anna has addressed his supporters. Facebook has 542 fan pages by Anna's name.[85][86]

Online surveys

According to the survey conducted by STAR News and Nielsen, 87% of the 8900 respondents of the survey supported the Jan Lokpal Bill. The survey conducted in 28 cities across the country, including all four metros mainly deals with three important points: publics knowledge about the Lokpal Bill; awareness about Annas campaign; and the perceived problems with the Jan Lokpal Bill.[87] Over a million people joined the Times of India online anti-graft campaign, in one of the biggest ever voting exercises in the virtual world. The news analysis points that citizens want to make their voices heard and have found the platform offered by the campaign a viable one to do so.[88]

Parliamentary actions on the proposed legislation


Main article: 2011 parliamentary debate on anti-corruption legislation On 27 August 2011, a special and all exclusive session of Parliament was conducted and a resolution was unanimously passed after deliberations in both the houses of Indian Parliament by sense of the house.[89][90] The resolution, in principle, agreed on the following subjects and forwarded the Bill to related standing committee for structure and finalise a report:[91][92]

A citizen charter on the bill An appropriate mechanism to subject lower bureaucracy to lokpal The establishment of Lokayuktas (ombudsmen at state level) in states

Anna Hazare, civil rights activists along with protestors at site of the fast welcomed this development on being informed, terming it as a battle "half won" while ending the protest.[91]

See also
India portal Law portal

2011 parliamentary debate on anti-corruption legislation Corruption in India Corruption Perceptions Index

India Against Corruption Indian black money Indian political scandals List of politicians in India charged with corruption List of scams in India Lok Ayukta

References
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25. ^ "Anna Hazare announces fast unto death till Jan Lokpal Bill enacted". The Economic Times. 4 April 2011. Archived from the original on 5 April 2011. Retrieved 5 April 2011. 26. ^ "Mumbai to join Hazares fast today for Jan Lokpal". The Indian Express. 5 April 2011. Archived from the original on 5 April 2011. Retrieved 5 April 2011. 27. ^ "Find ways to include activists' opinion: PMO". 10 March 2011. Retrieved 9 April 2011. 28. ^ "Hazare fast: Sibal meets Agnivesh, Kejriwal to pursue constructive dialogue". TruthDive. Retrieved 9 April 2011. 29. ^ "Anna Hazare announces jail bharo movement on April 13". Indian Express. 8 April 2011. Retrieved 8 April 2011. 30. ^ NULL. "Anna Hazare: I asked PM whether his team shares his values Forbes India". Moneycontrol.com. Retrieved 9 April 2011. 31. ^ "Hazare fast: people heckle, chase out politicos Politics Politics News ibnlive". Ibnlive.in.com. 3 February 2010. Retrieved 9 April 2011. 32. ^ a b "Anna sets Aug 15 deadline for Lokpal Bill". CBB IBN. 10 April 2011. 33. ^ Resolution, New Delhi, 8 April 2011, Ministry of Law and Justice, India. 34. ^ "Lokpal Bill drafting committee: Pranab Chairman; Shanti Bhushan co-Chairman". NDTV. 9 April 2011. Retrieved 17 August 2011. 35. ^ "Govt Attacked for Involving Civil Society in Drafting Lokpal". news.outlookindia.com. 3 July 2011. Retrieved 17 August 2011. 36. ^ "Govt attacked for involving civil society in drafting Lokpal". Indian Express. 4 July 2011. 37. ^ "Lokpal bill moved in Lok Sabha". 4 August 2011. Retrieved 17 August 2011. 38. ^ "No Permission for Hazare's Fast". Rediff. 15 Aug 2011. 39. ^ a b "JP Park Anna Hazare Delhi Police". Times of India. 16 Aug 2011. 40. ^ "Anna Hazare to be released from Tihar Jail". NDTV. 41. ^ "Anna Hazare breaks fast after 288 hours, nation relieved". India Times. 42. ^ Team member Santosh Hegde says Anna can't have his way with Parliament, Indian Express, 26 Aug 2011 43. ^ Agnivesh distances himself from Anna's stir The Hindu, 26 Aug 2011 44. ^ "Anna Hazare is the voice of millions of Indians: Sri Sri". Timesnow.Tv. 7 April 2011. Retrieved 17 August 2011. 45. ^ "Anna Hazare goes on fast demanding anti-corruption law". Zeenews.com. 5 April 2011. Retrieved 17 August 2011. 46. ^ "India against corruption: Ajit Singh supports Anna Hazare's campaign Economic Times". Economictimes.indiatimes.com. 5 April 2011. Retrieved 9 April 2011. 47. ^ "Pass ''Jan Lokpal Bill'' in next Parliament session: Manpreet, IBN Live News". Ibnlive.in.com. 3 February 2010. Retrieved 9 April 2011. 48. ^ "BJP extends support to Hazares fast on anti-graft bill". Inewsone.com. Retrieved 9 April 2011. 49. ^ Special Correspondent (5 April 2011). "News / National : BJP seeks all-party meet on Lokpal Bill". The Hindu (Chennai, India). Retrieved 9 April 2011. 50. ^ "Hazare calls for 'jail bharo' moevement". The Pioneer. India. 22 June 2011. Retrieved 17 August 2011. 51. ^ "Anna Hazares Jantar Mantar Crusade Against Corruption Gets Support From Aamir & Others!". Planet Bollywood. Retrieved 17 August 2011. 52. ^ "We should join hands with Hazare: Vishal Bhardwaj". Mangalorean.Com. 7 April 2011. Retrieved 17 August 2011.

53. ^ "Big B, Ramdev extend support to Hazare's crusade Times Of India". The Times Of India. 54. ^ "Bollywood resonates with Anna Hazare". The Hindu (Chennai, India). 9 April 2011. 55. ^ Central Chronicle Madhya Pradesh's News Portal[dead link] 56. ^ "B'wood continues to support Anna Hazare". Ibnlive.in.com. 8 April 2011. Retrieved 17 August 2011. 57. ^ [1][dead link] 58. ^ "Logjam over Lokpal bill continues". rediff.com. 59. ^ RADHIKA RAMASESHAN (22 June 2011). "DMK iffy on Lokpal, allies back govt Hazare wags fast finger". 60. ^ "Dalits to rally for Bahujan Lokpal Bill". 24 August 2011. Retrieved 24 August 2011. 61. ^ "Of the few, by the few version". The Indian Express. 7 April 2011. Retrieved 8 April 2011. 62. ^ Jan Lokpal a Frankenstein's monster: Sibal, Abantika Ghosh, TNN, 30 Jun 2011, NEW DELHI, THE TIMES OF INDIA 63. ^ Kattakayam, Jiby (7 April 2011). "I will fight till death: Anna Hazare". The Hindu (Chennai, India). Retrieved 12 April 2011. 64. ^ Jan Lokpal Bill version 1.8, annahazare.org 65. ^ "Opinion: Jan Lokpal bill: addressing concerns". 15 April 2011. Retrieved 17 August 2011. 66. ^ Parsai, Gargi (24 May 2011). "Lokpal panel postpones sticky issues". Retrieved 17 August 2011. 67. ^ Full text: The Jan Lokpal Bill, ibnlive.com, 7 Apr 2011 68. ^ Full details Jan Lokpal Bill Draft, Saturday , 9 April 2011, e-news4u.com 69. ^ Lokpal Bill, Jan Lokpal Bill version 1.8, 70. ^ Dhananjay Mahapatra (27 Jun 2011). "Can Lokpal be investigator, prosecutor, jury and judge?". 71. ^ "Hazare proposes Justices Verma, Hegde as chairman of Lokpal Bill panel". Indian Express. 8 April 2011. 72. ^ "Judiciary, PM should not be under Lokpal: Former CJI". Malayala Manorama. 26 June 2011. 73. ^ Sharma, Nagendar (15 August 2011). "Break lokpal into 5 institutions: Roy". Retrieved 17 August 2011. 74. ^ I'd rather not be Anna , The Hindu, 21 August 2011 75. ^ Jan Lokpal Bill regressive: Arundhati Roy The Hindu, August 30, 2011 76. ^ Anna's fast will not help solve crisis: Roy The Hindu, August 22, 20111 77. ^ "Press Release Team Anna's Referendum". NDTV. Retrieved 22 August 2011. 78. ^ "Referendum Results India Against Corruption". India Against Corruption. Retrieved 22 August 2011. 79. ^ Two-thirds of India hasnt heard of Lokpal: Survey, FP Editors, 9 Aug 2011, Firstpost 80. ^ "Current Lokpal Bill is a Sham". India Today. Retrieved 22 August 2011. 81. ^ a b c "Congress MPs Dattu Meghe. Priya Dutt Support Jan Lokpal Bill". News Worms. Retrieved 22 August 2011. 82. ^ a b "MP Priya Dutt, Nirupam meet Hazare Supporters; Vow support". Retrieved 22 August 2011. 83. ^ "Congress MP submits Jan Lokpal Bill before parliamentary Panel". IBN Live. Retrieved 22 August 2011.

84. ^ "Varun Gandhi to introduce Jan Lokpal Bill in Parliament". Retrieved 22 August 2011. 85. ^ "Jan Lokpal Bill: Anna Hazare hooks millions into the cyber space, tops film superstar Shahrukh Khan in Google search results". Economic Times. Retrieved 22 August 2011. 86. ^ "Anna's campaign big hit on YouTube, Facebook & Twitter; unites Netizens". Economic Times. Retrieved 22 August 2011. 87. ^ "87pc Indians support Jan Lokpal: STAR News-Nielsen Survey". Exchange4Media News. Retrieved 22 August 2011. 88. ^ "Over a million join TOI anti-graft drive". Retrieved 22 August 2011. 89. ^ Agreed! says Parliament to Anna; fast ends at 10 am, NDTV Correspondent, 27 August 2011 90. ^ Anna Hazare wins, Parliament passes resolution on Lokpal Bill, TNN, 27 Aug 2011, THE TIMES OF INDIA 91. ^ a b PM's letter to Anna Hazare on Parliament accepting his conditions, NDTV Correspondent, 27 August 2011 92. ^ Text of Parliament resolution on Anna's demands, NDTV Correspondent, 27 August 2011

External links

Final Version 2.3 under official consideration redrafted by Ramarao Veluri, available on Govt of India website Jan Lokpal Bill Activists proposed version Dalit leaders To Meet Abhishek Singhvi With Bahujan Lokpal Bill [hide]v d eCorruption in India

Politics Protests Indian anti-corruption laws and enforcement International anti-corruption instruments and efforts List of scandals Prominent anti-corruption NGO's Other

List of politicians in India charged with corruption 2011 Indian anti-corruption movement Jan Lokpal Bill Right to Information Act Whistleblower protection in India Lokpal Lokayukta United Nations Convention against Corruption International asset recovery List of scandals in India India Against Corruption Indian black money Corruption Perceptions Index Mauritius route License Raj Mafia Raj Corruption in Mumbai

United States public debt


From Wikipedia, the free encyclopedia

Part of a series of articles on

United States budget and debt topics


Major dimensions

Federal budget Public debt Expenditures Taxation Economy Financial position Military budget Programs Medicare Social Security Contemporary issues Health care reform Social Security debate Subprime mortgage crisis Bush tax cuts Starve the beast Bowles-Simpson Commission Debt-ceiling crisis Terminology Cumulative deficit = Debt Inflation Balance of payments vde

U.S. debt from 1940 to 2010. Red lines indicate the Debt Held by the Public (net public debt) and black lines indicate the Total Public Debt Outstanding (gross public debt), the difference being that the gross debt includes that held by the federal government itself. The second panel shows the two debt figures as a percentage of U.S. GDP (dollar value of U.S. economic production for that year). The top panel is deflated so every year is in 2010 dollars. The United States public debt is the money borrowed by the federal government of the United States at any one time through the issue of securities by the Treasury and other federal government agencies. The US national public debt consists of two components:

Debt held by the public comprises securities held by investors outside the federal government, including that held by investors, the Federal Reserve System and foreign, state and local governments.[1] Intragovernment debt comprises Treasury securities held in accounts administered by the federal government, such as the Social Security Trust Fund.

The public debt increases or decreases as a result of the annual unified budget deficit or surplus. The federal government budget deficit or surplus is the cash difference between government receipts and spending, ignoring intra-governmental transfers. However, there is certain spending (supplemental appropriations) that add to the debt but are excluded from the deficit. The deficit is presented on a cash rather than an accruals basis, although the accrual basis may provide more information on the longer-term implications of the government's annual operations.[2] The public debt has increased by over $500 billion each year since fiscal year (FY) 2003, with increases of $1 trillion in FY2008, $1.9 trillion in FY2009, and $1.7 trillion in FY2010.[3] As of August 3, 2011, the gross debt was $14.70 trillion dollars, of which $10.06 trillion was held by the public and $4.64 trillion was intragovernmental holdings.[4] The annual gross domestic product (GDP) to the end of June 2011 was $15.003 trillion (July

29, 2011 estimate),[5] with gross debt at a ratio of 98% of GDP, and debt held by the public at 67% of GDP. In the United States, there continues to be disagreement between Democrats and Republicans regarding the United States debt, with Republicans typically advocating a smaller federal government role and lower taxes, while Democrats advocate a larger federal government role and higher taxes. On August 2, 2011, President Barack Obama signed into law the Budget Control Act of 2011, averting a possible financial default. During June 2011, the Congressional Budget Office called for "...large and rapid policy changes to put the nation on a sustainable fiscal course."[6]

Contents
[hide]

1 History 2 Valuation and measurement o 2.1 Public and government accounts o 2.2 Fannie Mae and Freddie Mac obligations excluded o 2.3 Guaranteed obligations excluded o 2.4 Unfunded obligations excluded o 2.5 Measuring debt relative to gross domestic product (GDP) o 2.6 Calculating the annual change in debt 3 Debt ceiling 4 Credit rating downgrade, 2011 5 Ownership of debt o 5.1 Foreign ownership 6 Forecasting the debt o 6.1 CBO long-term scenarios 7 Causes of change in debt o 7.1 2008 vs. 2009 o 7.2 2001 vs. 2009 o 7.3 2001 vs. 2012 8 Risks and obstacles o 8.1 Risks to the U.S. dollar and economy o 8.2 Rollover and maturity risks o 8.3 Long-term risks to financial health of federal government o 8.4 Interest expense o 8.5 Monitoring the risks of increasing debt levels 9 Debates o 9.1 Is there a "danger level" of debt? o 9.2 Measure of public debt o 9.3 Is intragovernmental debt "real" debt? 10 Appendix o 10.1 National debt for selected years o 10.2 Foreign holders of U.S. Treasury Securities o 10.3 Statistics and comparisons o 10.4 Table: International debt comparisons o 10.5 Recent additions to the public debt of the United States

o 10.6 Historical debt ceiling levels 11 See also 12 References 13 Further reading 14 External links

[edit] History

U.S. federal debt held by the public, from 1800 to 1999

Time series of U.S. federal debt overlaid with partisan affiliation of the White House and the Congress. See also: National debt by U.S. presidential terms The United States has had a public debt since its founding in 1791. Debts incurred during the American Revolutionary War and under the Articles of Confederation amounted to $75,463,476.52 on January 1, 1791. From 1796 to 1811 there were 14 budget surpluses and 2 deficits. There was a sharp increase in the debt as a result of the War of 1812. In the 20 years following that war, there were 18 surpluses and the US paid off 99.97% of its then debt. Another sharp increase in the debt occurred as a result of the Civil War. The debt was just $65 million in 1860, but passed $1 billion in 1863 and reached $2.7 billion by the end of the war. During the following 47 years, there were 36 surpluses and 11 deficits. During this period 55% of the national debt was paid off.

The next period of major increase in the national debt took place during World War I, reaching $25.5 billion at its conclusion. It was followed by 11 consecutive surpluses and saw the debt reduced by 36%. Social programs enacted during the Great Depression and the buildup and involvement in World War II during the F.D. Roosevelt and Truman presidencies in the 1930s and '40s caused the largest increase a sixteenfold increase in the gross public debt from $16 billion in 1930 to $260 billion in 1950. When Roosevelt took office in 1933, the national debt was almost $20 billion; a sum equal to 20 percent of the U.S. gross domestic product (GDP). During its first term, the Roosevelt administration ran large annual deficits between 2 and 5 percent of GDP. By 1936, the national debt had increased to $33.7 billion or approximately 40 percent of GDP.[7] Gross debt relative to GDP rose to over 100% to pay for WWII. After this period, beginning in 1965 and each year afterward, the growth of the U.S. aggregate debt began increase faster than GDP as GDP growth rates in western countries began to taper off.[8] Gross debt in nominal dollars quadrupled during the Reagan and Bush presidencies from 1980 to 1992. The net public debt quintupled in nominal terms. Gross debt relative to GDP declined after WWII, then rose during the 1980s as part of Reaganomics.[9][10] During the 1970s, debt held by the public declined from 28% of GDP to 26% of GDP. During the 1980s, it rose to 41% of GDP. In nominal dollars the net public debt rose and then fell between 1992 and 2000 from $3 trillion in 1992 to $3.4 trillion in 2000, in part due to the Dot-com bubble.[11] During the 1990s, debt held by the public rose to 50% and then was reduced to 39% by the end of the decade. During the presidency of George W. Bush, the gross public debt increased from $5.7 trillion in January 2001 to $10.7 trillion by December 2008.[12] Under President Barack Obama, the debt increased from $10.7 trillion in 2008 to $14.2 trillion by February 2011.[13] Debt relative to GDP rose due to recessions and policy decisions in the early 21st century. From 2000 to 2008 debt held by the public rose from 35% to 40%, and to 62% by the end of fiscal year 2010.[14]

[edit] Valuation and measurement


[edit] Public and government accounts

Detailed breakdown of government holders of treasury debt and debt instruments used of the public portion. The total or gross national debt is the sum of the "debt held by the public" and "intragovernmental" debt. As of February 2011, the "debt held by the public" was $9.6 trillion and the "intragovernmental debt" was $4.6 trillion, for a total of $14.2 trillion.[13] The national debt can also be classified into marketable or non-marketable securities. As of February 2011, total marketable securities were $9.0 trillion while the non-marketable securities were $5.2 trillion. Most of the marketable securities are Treasury notes, bills, and bonds held by investors and governments globally. The non-marketable securities are mainly the "government account series" owed to certain government trust funds such as the Social Security Trust Fund, which represented $2.5 trillion dollars in 2010.[13][15] Other large intragovernmental holders include the Federal Housing Administration, the Federal Savings and Loan Corporation's Resolution Fund and the Federal Hospital Insurance Trust Fund (Medicare).

[edit] Fannie Mae and Freddie Mac obligations excluded


See also: Federal takeover of Fannie Mae and Freddie Mac Although not included in the debt figures reported by the government, the U.S. government has moved to more explicitly support the soundness of obligations of Freddie Mac and Fannie Mae, starting in July 2008 via the Housing and Economic Recovery Act of 2008, and the September 7, 2008 Federal Housing Finance Agency (FHFA) conservatorship of both government sponsored enterprises (GSEs). The on- or off-balance sheet obligations of those two independent GSEs was just over $5 trillion at the time the conservatorship was put in place, consisting mainly of mortgage payment guarantees.[16] The extent to which the government will be required to pay these obligations depends on a variety of economic and housing market factors. The federal government provided over $110 billion to Fannie and Freddie by 2010.[17]

[edit] Guaranteed obligations excluded


See also: Temporary Liquidity Guarantee Program and Exchange Stabilization Fund U.S. federal government guarantees are not included in the public debt total, until such time as there is a call on the guarantees. For example, the U.S. federal government in late-2008 guaranteed large amounts of obligations of mutual funds, banks, and corporations under several programs designed to deal with the problems arising from the late-2000s financial crisis. The funding of direct investments made in response to the crisis, such as those made under the Troubled Assets Relief Program, are included in the debt.

[edit] Unfunded obligations excluded


The U.S. government is obligated under current law to mandatory payments for programs such as Medicare, Medicaid and Social Security. The GAO projects that payouts for these programs will significantly exceed tax revenues over the next 75 years. The Medicare Part A (hospital insurance) payouts already exceed program tax revenues, and social security

payouts exceeded payroll taxes in fiscal 2010. These deficits require funding from other tax sources or borrowing.[18] The present value of these deficits or unfunded obligations is an estimated $45.8 trillion. This is the amount that would have to be set aside during 2009 so that the principal and interest would pay for the unfunded obligations through 2084. Approximately $7.7 trillion relates to Social Security, while $38.2 trillion relates to Medicare and Medicaid. In other words, health care programs will require nearly five times the level of funding than Social Security. Adding this to the national debt and other federal obligations would brings the total obligations to nearly $62 trillion.[19] However, these unfunded obligations are not counted in the national debt. The Congressional Budget Office (CBO) has indicated that: "Future growth in spending per beneficiary for Medicare and Medicaid the federal governments major health care programs will be the most important determinant of long-term trends in federal spending. Changing those programs in ways that reduce the growth of costs which will be difficult, in part because of the complexity of health policy choices is ultimately the nations central long-term challenge in setting federal fiscal policy."[20]

[edit] Measuring debt relative to gross domestic product (GDP)

2010 Budget: Total Debt $ and % to GDP 20002010 GDP is a measure of the total size and output of the economy. One measure of the debt burden is its size relative to GDP. In fiscal 2007, U.S. federal debt held by the public was approximately $5 trillion (36.8 percent of GDP) and total debt was $9 trillion (65.5 percent of GDP).[21] Debt held by the public represents money owed to those holding government securities such as Treasury bills and bonds. Total debt includes intra-governmental debt, which includes amounts owed to the Social Security Trust Funds (about $2.2 trillion in FY 2007)[22] and Civil Service Retirement Funds. By August 2008, the total debt was $9.6 trillion.[23] Based on the 2010 U.S. budget, total national debt will nearly double in dollar terms between 2008 and 2015 and will grow to nearly 100% of GDP, versus a level of approximately 80% in early 2009.[24] Multiple government sources including the current and previous presidents, the GAO, Treasury Department, and CBO have said the U.S. is on an unsustainable fiscal path.[25] As the debt ratio increases, the exchange value of the dollar may fall. Paying back

debt with cheaper currency could cause investors (including other governments) to demand higher interest rates if they anticipate further dollar depreciation. Paying higher interest rates could slow domestic U.S. growth. Higher debt increases interest payments on the debt, which already exceed $430 billion annually as discussed below, or about 15 cents of every tax dollar for 2008.[26] According to the CIA Factbook, nine countries have debt to GDP ratios over 100% for 2010, the largest of which is Japan at approximately 225%.[27] Further, a high public debt to GDP ratio may also slow economic growth. Economists Carmen Reinhart and Kenneth Rogoff calculated that countries with public debt above 90 percent of GDP grow by an average of 1.3 percentage points per year slower than less indebted countries. The public debt-to-GDP ratio in March 2010 is about 60 percent of GDP; CBO projects it will reach 90 percent around 2020 under policies in place in 2010. If growth slows, all of the economic challenges the U.S. faces will worsen.[28]

[edit] Calculating the annual change in debt

Comparison of deficits to change in debt in 2008 The annual change in debt is not equal to the "total deficit" typically reported in the media. Social Security payroll taxes and benefit payments, along with the net balance of the U.S. Postal Service, are considered "off-budget", while most other expenditure and receipt categories are considered "on-budget." The total federal deficit is the sum of the on-budget deficit (or surplus) and the off-budget deficit (or surplus). Since FY1960, the federal government has run on-budget deficits except for FY1999 and FY2000, and total federal deficits except in FY1969 and FY1998FY2001.[29] In large part because of Social Security surpluses, the total deficit is smaller than the onbudget deficit. The surplus of Social Security payroll taxes over benefit payments is spent by the government for other purposes. However, the government credits the Social Security Trust fund for the surplus amount, adding to the "intragovernmental debt." The total federal debt is divided into "intragovernmental debt" and "debt held by the public." In other words, spending the "off budget" Social Security surplus adds to the total national debt (by increasing the intragovernmental debt) while the surplus reduces the "total" deficit reported in the media.

Certain spending called "supplemental appropriations" is outside the budget process entirely but adds to the national debt. Funding for the Iraq and Afghanistan wars was accounted for this way prior to the Obama administration. Certain stimulus measures and earmarks are also outside the budget process. For example, in FY2008 an off-budget surplus of $183 billion reduced the on-budget deficit of $642 billion, resulting in a total federal deficit of $459 billion. Media often reported the latter figure. The national debt increased by $1,017 billion between the end of FY2007 and the end of FY2008.[30] The federal government publishes the total debt owed (public and intragovernmental holdings) at the end of each fiscal year[31] and since FY1957 the amount of debt held by the federal government has increased each year.

[edit] Debt ceiling


See also: United States debt-ceiling crisis Under Article I Section 8 of the United States Constitution, Congress has the sole power to borrow money on the credit of the United States. From the founding of the United States until 1917 Congress directly authorized each individual debt issuance separately. In order to provide more flexibility to finance the United States' involvement in World War I, Congress modified the method by which it authorizes debt in the Second Liberty Bond Act of 1917.[32] Under this act Congress established an aggregate limit, or "ceiling," on the total amount of bonds that could be issued. The current debt ceiling, in which an aggregate limit is applied to nearly all federal debt, was substantially established by Public Debt Acts[33][34] passed in 1939 and 1941. The Treasury is authorized to issue debt needed to fund government operations (as authorized by each federal budget) up to a stated debt ceiling, with some small exceptions. The process of setting the debt ceiling is separate and distinct from the regular process of financing government operations, and raising the debt ceiling does not have any direct impact on the budget deficit. The US government proposes a federal budget every year, which must be approved by Congress. This budget details projected tax collections and outlays and, if there is a budget deficit, the amount of borrowing the government would have to do in that fiscal year. A vote to increase the debt ceiling is, therefore, usually treated as a formality, needed to continue spending that has already been approved previously by the Congress and the President. The Government Accountability Office explains: "The debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred."[35] The apparent redundancy of the debt ceiling has led to suggestions that it should be abolished altogether.[36][37] Since 1979, the House of Representatives passed a rule to automatically raise the debt ceiling when passing a budget, without the need for a separate vote on the debt ceiling, except when the House votes to waive or repeal this rule. The exception to the rule was invoked in 1995, which resulted in two government shutdowns.[38] When the debt ceiling is reached, Treasury can declare a debt issuance suspension period and utilize "extraordinary measures" to acquire funds to meet federal obligations but which do not

require the issue of new debt.[39] Treasury first used these measures on December 16, 2009, to remain within the debt ceiling, and avoid a government shutdown,[40] and also used it during the debt-ceiling crisis of 2011. However, there are limits to how much can be raised by these measures. The debt ceiling was increased on February 12, 2010, to $14.294 trillion.[41][42][43] On April 15, 2011, Congress finally passed the 2011 United States federal budget, authorizing federal government spending for the remainder of the 2011 fiscal year, which ends on September 30, 2011, with a deficit of $1.48 trillion,[citation needed] without increasing the debt ceiling. The two Houses of Congress were unable to agree on a revision of the debt ceiling in mid-2011, resulting in the United States debt-ceiling crisis. The impasse was resolved with the passing on August 2, 2011, the deadline for a default by the US on its debt, of the Budget Control Act of 2011, which increased the debt ceiling but established several complex mechanisms to reduce public debt, including the creation of the United States Congress Joint Select Committee on Deficit eduction and the requirement for vote on a Balanced Budget Amendment.

[edit] Credit rating downgrade, 2011


Main articles: United States federal government credit-rating downgrade, 2011 and August 2011 stock markets fall On August 5, 2011, after Congress voted to raise the debt ceiling of the United States federal government, the credit rating agency Standard & Poor's downgraded the credit rating of the United States federal government from AAA to AA+. It was the first time the US had been downgraded since it was originally given a AAA rating on its debt by Moody's in 1917.[44] According to the BBC, Standard & Poor's had "lost confidence" in the ability of the United States government to make decisions.[45] The United States Treasury, political figures from both parties in the United States including the Obama administration, Mitt Romney, Michele Bachmann and John Kerry, billionaire Warren Buffett and Nobel Memorial Prize winner Paul Krugman criticized the move. Together with the budget deficit, the political climate at the time was one of the reasons given by Standard & Poor's to revise the outlook on the US sovereign credit rating down to negative on April 18, 2011.[46] Standard and Poor's downgraded the credit rating by one notch from AAA to AA+ on August 5, 2011, for the first time ever. The long-term outlook is negative and it could lower the rating further to AA within the next 2 years.[47][48] The downgrade was met with severe criticism from the Obama administration, commentators, and other political figures.[49][50] The US still has a AAA rating from other ratings agencies.

[edit] Ownership of debt

Estimated ownership each year through time. Because a large variety of people own the notes, bills, and bonds in the "public" portion of the debt, Treasury also publishes information that groups the types of holders by general categories to portray who owns United States debt. In this data set, some of the public portion is moved and combined with the total government portion, because this amount is owned by the Federal Reserve as part of United States monetary policy. (See Federal Reserve System) As is apparent from the chart, a little less than half of the total national debt is owed to the "Federal Reserve and intragovernmental holdings". The foreign and international holders of the debt are also put together from the notes, bills, and bonds sections. To the right is a chart for the data as of June 2008:

[edit] Foreign ownership

Composition of U.S. Long-Term Treasury Debt held by foreign states, Nov. 2005Nov. 2010. June figures are results of comprehensive Treasury Department surveys. As of January 2011, foreigners owned $4.45 trillion of U.S. debt, or approximately 47% of the debt held by the public of $9.49 trillion and 32% of the total debt of $14.1 trillion.[51] The largest holders were the central banks of China, Japan, the United Kingdom and Brazil.[53] The share held by foreign governments has grown over time, rising from 13% of the public debt in 1988[54] to 25% in 2007.[55] As of May 2011 the largest single holder of U.S. government debt was China, with 36 percent of all foreign-held U.S. Treasury securities (16% of total US public debt).[56] China's holdings of government debt, as a percentage of all foreign-held government debt, have

decreased a bit over the last year, but are up significantly since 2000 (when China held just 6 percent of all foreign-held U.S. Treasury securities).[57]

Major Foreign Holders of U.S. Treasury Securities, 20002010 Source: http://FutureofUSChinaTrade.com

Major Foreign Holders of U.S. Treasury Securities, June 2010-May 2011[58] This exposure to potential financial or political risk should foreign banks stop buying Treasury securities or start selling them heavily was addressed in a June 2008 report issued by the Bank of International Settlements, which stated, "Foreign investors in U.S. dollar assets have seen big losses measured in dollars, and still bigger ones measured in their own currency. While unlikely, indeed highly improbable for public sector investors, a sudden rush for the exits cannot be ruled out completely."[59] On May 20, 2007, Kuwait discontinued pegging its currency exclusively to the dollar, preferring to use the dollar in a basket of currencies.[60] Syria made a similar announcement on June 4, 2007.[61] In September 2009 China, India and Russia said they were interested in buying IMF gold to diversify their dollar-denominated securities.[62] However, in July 2010 China's State Administration of Foreign Exchange "ruled out the option of dumping its vast holdings of US Treasury securities" and said gold "cannot become a main channel for investing our foreign exchange reserves" because the market for gold is too small and prices are too volatile.[63]

[edit] Forecasting the debt

Further information: United States federal budget Tracking current levels of debt is a cumbersome but fairly straightforward process. Making future projections is much more difficult for a number of reasons. For example, before the September 11, 2001 attacks, the George W. Bush administration projected in the 2002 budget that there would be a $1.288 trillion surplus from 2001 through 2004.[64] In the 2005 Mid-Session Review this had changed to a projected four-year deficit of $851 billion, a swing of $2.138 trillion.[65] The latter document states that 49% of this swing was due to "economic and technical re-estimates", 29% was due to "tax relief" (mainly the Bush Tax Cuts), and the remaining 22% was due to "war, homeland, and other enacted legislation" (mainly expenditures for the War on Terror, Iraq War, and homeland security). Projections between different groups will sometimes differ because they make different assumptions. For example, in August 2003, a Congressional Budget Office report projected a $1.4 trillion deficit from 2004 through 2013.[66] However, a mid-term and long-term joint analysis a month later by the Center on Budget and Policy Priorities, the Committee for Economic Development, and the Concord Coalition stated that "In projecting deficits, CBO follows mechanical 'baseline' rules that do not allow it to account for the costs of any prospective tax or entitlement legislation, no matter how likely the enactment of such legislation may be." The analysis added in a proposed tax cut extension and Alternative Minimum Tax reform (enacted by a 2005 act), prescription drug plan (Medicare Part D, enacted in a 2003 act), and further increases in defense, homeland security, international, and domestic spending. According to the report, this "adjusts CBO's official ten-year projections for more realistic assumptions about the costs of budget policies", raising the projected deficit from $1.4 trillion to $5 trillion.[67] The Office of Management and Budget forecasts that, by the end of fiscal year 2012, gross federal debt will total $16.3 trillion. Thus, the projected debt will equal 101% of projected gross domestic product, which represents a milestone in the U.S. economy. Public debt alone, which excludes amounts that the government owes its citizens via various trust funds, will be 67% of GDP by the end of fiscal 2012.[68] Historical analysis of government spending or debt relative to GDP can be misleading, according to the GAO, CBO and Treasury Department. This is because demographic shifts and per-capita spending are causing Social Security and Medicare/Medicaid expenditures to grow significantly faster than GDP. If this trend continues, government simulations under various assumptions project mandatory spending for these programs will exceed taxes dedicated to these programs by more than $40 trillion over the next 75 years on a present value basis.[69] According to the GAO, this will double debt-to-GDP ratios by 2040 and double them again by 2060, reaching 600% by 2080.[70] A GAO simulation indicates that Social Security, Medicare, and Medicaid expenditures alone will exceed 20% of GDP by 2080, which is approximately the historical ratio of taxes collected by the federal government. In other words, these mandatory programs alone will take up all government revenues under this simulation.[69]

[edit] CBO long-term scenarios

CBO-Public Debt Under "Extended" and "Alternate" Scenarios The CBO reported during June 2011 two scenarios for how debt held by the public will change during the 20102035 time period. The "extended baseline scenario" assumes that the Bush tax cuts (extended by Obama) will expire per current law in 2012. It also assumes the alternative minimum tax (AMT) will be allowed to affect more middle-class families, reductions in Medicare reimbursement rates to doctors will occur, and that revenues reach 23% GDP by 2035, much higher than the historical average 18%. Under this scenario, government spending on everything other than the major mandatory health care programs, Social Security, and interest on federal debt (activities such as national defense and a wide variety of domestic programs) would decline to the lowest percentage of GDP since before World War II. Under this scenario, public debt rises from 69% GDP in 2011 to 84% by 2035, with interest payments absorbing 4% of GDP vs. 1% in 2011.[71] CBO estimated in August 2011 that if laws currently "on the books" were enforced without changes, meaning the "extended baseline scenario" described above is implemented along with deficit reductions from the Budget Control Act of 2011, the deficit would decline from 8.5% GDP in 2011 to around 1% GDP by 2021.[72] The "alternative fiscal scenario" more closely assumes the continuation of present trends, such as permanently extending the Bush tax cuts, restricting the reach of the AMT, and keeping Medicare reimbursement rates at the current level (the so-called "Doc Fix" versus declining by one-third as mandated under current law.) Revenues are assumed to remain around the historical average 18% GDP. Under this scenario, public debt rises from 69% GDP in 2011 to 100% by 2021 and approaches 190% by 2035.[71] The CBO reported: "Many budget analysts believe that the alternative fiscal scenario presents a more realistic picture of the nations underlying fiscal policies than the extended-baseline scenario does. The explosive path of federal debt under the alternative fiscal scenario underscores the need for large and rapid policy changes to put the nation on a sustainable fiscal course."[71]

[edit] Causes of change in debt

Historical comparison of US Public Debt to marginal tax rates for highest and lowest income brackets. Sources: Congressional Budget Office and U.S. Bureau of the Public Debt Public debt is the cumulative result of budget deficits; that is, government spending exceeding revenues. In the figure to the right, debt is shown to increase as revenue (taxes) decrease.

[edit] 2008 vs. 2009


In October 2009, the Congressional Budget Office (CBO) gave the reasons for the higher budget deficit in 2009 ($1,410 billion, ie. $1.41 trillion) over that of 2008 ($460 billion). The major changes included: declines in tax receipt of $320 billion due to the effects of the recession and another $100 billion due to tax cuts in the stimulus bill (the American Recovery and Reinvestment Act or ARRA); $245 billion for the Troubled Asset Relief Program (TARP) and other bailout efforts; $100 billion in additional spending for ARRA; and another $185 billion due to increases in primary budget categories such as Medicare, Medicaid, unemployment insurance, Social Security, and Defense including the war effort in Afghanistan and Iraq. This was the highest budget deficit relative to GDP (9.9%) since 1945.[73] The national debt increased by $1.9 trillion during FY2009, versus the $1.0 trillion increase during 2008.[74] The Obama Administration also made four significant accounting changes to more accurately report the total spending by the federal government. The four changes were: 1) accounting for the wars in Iraq and Afghanistan (overseas military contingencies) in the budget rather than through the use of supplemental appropriations; 2) assuming the Alternative Minimum Tax will be indexed for inflation; 3) accounting for the full costs of Medicare reimbursements; and 4) anticipating the inevitable expenditures for natural disaster relief. According to administration officials, these changes will make the debt over ten years look $2.7 trillion larger than it would otherwise appear.[75]

[edit] 2001 vs. 2009

Causes of Change in Federal Spending as % GDP 20012009 from CBO Data

Causes for Changes in CBO Forecasts. According to the CBO, the U.S. last had a surplus during fiscal year (FY) 2001. From FY2001 to FY2009, at the height of the Global Financial Crisis, spending increased by 6.5% of GDP (from 18.2% of GDP to 24.7%) while taxes declined by 4.7% of GDP (from 19.5% of GDP to 14.8%). Spending increases (expressed as % of GDP) were in the following areas: Medicare & Medicaid (1.7%), defense (1.6%), income security such as unemployment benefits and food stamps (1.4%), social security (0.6%) and all other categories (1.2%). Revenue reductions were individual income taxes (3.3%), payroll taxes (0.5%), corporate income taxes (0.5%) and other (0.4%). The 2009 spending level is the highest relative to GDP in 40 years, while the tax receipts are the lowest relative to GDP in 40 years. The next highest spending year was 1985 (22.8%) while the next lowest tax year was 2004 (16.1%).[76]

[edit] 2001 vs. 2012


The U.S. budget situation has deteriorated significantly since 2001, when the CBO forecast average annual surpluses of approximately $850 billion from 20092012. The average deficit forecast in each of those years as of June 2009 was approximately $1,215 billion. The New York Times analyzed this roughly $2 trillion "swing," separating the causes into four major categories along with their share:

Recessions or the business cycle (37%); Policies enacted by President Bush (33%); Policies enacted by President Bush and supported or extended by President Obama (20%); and New policies from President Obama (10%).

CBO data is based only on current law, so policy proposals that have yet to be made law are not included in their analysis. The article states that "President Obamas agenda ... is responsible for only a sliver of the deficits", but that he "...does not have a realistic plan for reducing the deficit..."[77] Presidents do not, acting alone, have constitutional authority to levy taxes or spend money; all such proposals must originate in Congress, but the President has a veto over new laws, and his priorities influence Congressional action.[78] Peter Orszag, the OMB Director under President Obama, stated in a November 2009 that of the $9 trillion in deficits forecast for the 20102019 period, $5 trillion are due to programs from the prior administration, including tax cuts from 2001 and 2003 and the unfunded Medicare Part D. Another $3.5 trillion are due to the financial crisis, including reductions in future tax revenues and additional spending for the social safety net such as unemployment benefits. The remainder are stimulus and bailout programs related to the crisis.[79] The Pew Center reported in April 2011 the cause of a $12.7 trillion shift in the debt situation, from a 2001 CBO forecast of a cumulative $2.3 trillion surplus by 2011 versus the estimated $10.4 trillion public debt we actually face in 2011. The major drivers were:

Revenue declines due to the recession, separate from the Bush tax cuts of 2001 and 2003: 28% Defense spending increases: 15% Bush tax cuts of 2001 and 2003: 13% Increases in net interest: 11% Other non-defense spending: 10% Other tax cuts: 8% Obama Stimulus: 6% Medicare Part D: 2% Other reasons: 7%[80]

[edit] Risks and obstacles


[edit] Risks to the U.S. dollar and economy
A high debt level may affect inflation, interest rates, and economic growth. A variety of factors are placing increasing pressure on the value of the U.S. dollar, increasing the risk of devaluation or inflation and encouraging challenges to dollar's role as the world's reserve currency. If another currency or basket of currencies replaced the dollar as the reserve currency, the U.S. would face higher interest rates to attract capital, reducing economic growth for the long-term. The Economist wrote in May 2009: Having spent a fortune bailing out their banks, Western governments will have to pay a price in terms of higher taxes to meet the interest on that debt. In the case of countries (like Britain and America) that have trade as well as budget deficits, those higher taxes will be needed to

meet the claims of foreign creditors. Given the political implications of such austerity, the temptation will be to default by stealth, by letting their currencies depreciate. Investors are increasingly alive to this danger...[81] The Government Accountability Office (GAO), the federal government's auditor, argues that the U.S. is on a fiscally "unsustainable" path and that politicians and the electorate have been unwilling to change this path.[18] The 2010 U.S. budget prepared by the President indicated annual debt increases of nearly $1 trillion annually through 2019, projecting the total U.S. national debt to grow to $23.3 trillion by 2019.[82] Further, the subprime mortgage crisis has significantly increased the financial burden on the U.S. government, with over $10 trillion in commitments or guarantees and $2.6 trillion in investments or expenditures as of May 2009, only some of which are included in the budget document.[83] The U.S. also has a large trade deficit, meaning imports exceed exports. Such deficits are only possible if there is a large foreign investment, or a capital account surplus. The balance of payments identity requires that a country (such as the USA) running a current account deficit also have a capital account (investment) surplus of the same amount. In 2005, Ben Bernanke addressed the implications of the USA's high and rising current account (trade) deficit, resulting from USA imports exceeding its exports. Between 1996 and 2004, the USA current account deficit increased by $650 billion, from 1.5% to 5.8% of GDP.[84] Debt levels may also affect economic growth rates. Economists Kenneth Rogoff and Carmen Reinhart reported in 2010 that among the 20 advanced countries studied, average annual GDP growth was 34% when debt was relatively moderate or low (i.e. under 60% of GDP), but it dips to just 1.6% when debt was high (i.e. above 90% of GDP).[85] The CBO reported several types of risk factors related to rising debt levels in a July 2010 publication:

A growing portion of savings would go towards purchases of government debt, rather than investments in productive capital goods such as factories and computers, leading to lower output and incomes than would otherwise occur; If higher marginal tax rates were used to pay rising interest costs, savings would be reduced and work would be discouraged; Rising interest costs would force reductions in important government programs; Restrictions to the ability of policymakers to use fiscal policy to respond to economic challenges; and An increased risk of a sudden fiscal crisis, in which investors demand higher interest rates.[86]

[edit] Rollover and maturity risks


In addition to the debt increase required to fund government spending in excess of tax revenues during a given year, some Treasury securities issued in prior years mature and must be "rolled-over" or replaced with new security issuance. During the financial crisis, the Treasury issued a sizable amount of relatively shorter-term debt, which caused the average maturity on total Treasury debt to reach a 25-year low of just more than 50 months in 2009. As of late 2009, roughly 43% of U.S. public debt needed to be rolled over within 12 months, the highest proportion since the mid-1980s. The relatively short maturity of outstanding Treasury debt, coupled with the increased reliance on foreign creditors, puts the U.S. at

greater risk of sharply higher borrowing costs should risk perceptions change abruptly in credit markets.[85]

[edit] Long-term risks to financial health of federal government


Main article: United States federal budget

Risks due to increasing entitlement spending, according to GAO's projections of future trends Several government agencies provide budget and debt data and analysis. These include the Government Accountability Office (GAO), the Congressional Budget Office (CBO), the Office of Management and Budget (OMB), and the U.S. Treasury Department. These agencies have reported that the federal government is facing a series of critical long-term financing challenges. This is because expenditures related to entitlement programs such as Social Security, Medicare, and Medicaid are growing considerably faster than the economy overall, as the population grows older. These agencies have indicated that under current law, sometime between 2030 and 2040, mandatory spending (primarily Social Security, Medicare, Medicaid, and interest on the national debt) will exceed tax revenue. In other words, all "discretionary" spending (e.g., defense, homeland security, law enforcement, education, etc.) will require borrowing and related deficit spending. These agencies have used such language as "unsustainable" and "trainwreck" to describe such a future.[18] While there is significant debate about solutions,[87] the significant long-term risk posed by the increase in entitlement spending is widely recognized,[88] with health care costs (Medicare and Medicaid) the primary risk category.[89][90] In a June 2010 opinion piece in the Wall Street Journal, former chairman of the Federal Reserve, Alan Greenspan noted that "Only politically toxic cuts or rationing of medical care, a marked rise in the eligible age for health and retirement benefits, or significant inflation, can close the deficit."[91] If significant reforms are not undertaken, benefits under entitlement programs will exceed government income by over $40 trillion over the next 75 years.[90] According to the GAO, this will cause debt ratios relative to GDP to double by 2040 and double again by 2060, reaching 600 percent by 2080.[18]

In 2006, Professor Laurence Kotlikoff argued the United States must eventually choose between "bankruptcy", raising taxes, or cutting payouts. He assumes there will be evergrowing payment obligations from Medicare and Medicaid.[92] Others who have attempted to bring this issue to the fore of America's attention range from Ross Perot in his 1992 Presidential bid, to motivational speaker Robert Kiyosaki, and David Walker, former head of the Government Accountability Office.[93][94] Thomas Friedman has argued that increasing dependence on foreign sources of funding will render the U.S. less able to act independently.[95] Moody's Investors Service warned in March 2010 that the United States' AAA-rated U.S Treasury bonds, while currently not in danger, could be downgraded in the future if the U.S. government failed to rein in public debt, saying that growing the economy cannot be the only solution.[96] There is a significant difference between the reported budget deficit and the change in debt. The key differences are: 1) The Social Security surplus, which reduces the "off-budget" deficit often reported in the media; and 2) Non-budgeted spending, such as for the Iraq and Afghanistan wars. The debt increased by approximately $550 billion on average each year during the 20032007 period, but then increased over $1 trillion during FY 2008. The cumulative debt of the United States in the past 8 completed fiscal years was approximately $4.3 trillion, or about 43% of the total national debt of ~$10.0 trillion as of September 2008.[12][97][98]

[edit] Interest expense

Components of interest on the debt. Budgeted net interest on the public debt was approximately $240 billion in fiscal years 2007 and 2008. This represented approximately 9.5% of government spending. Interest was the fourth largest single budgeted disbursement category, after defense, Social Security, and Medicare.[99] Despite higher debt levels, this declined to $189 billion in 2009 or approximately 5% of spending, due to lower interest rates. Average interest rates declined due to the crisis from 1.6% in 2008 to 0.3% in 2009.[100]

During FY2008, the government also accrued a non-cash interest expense of $212 billion for intra-governmental debt, primarily the Social Security Trust Fund, for a total interest expense of $454 billion.[101] This accrued interest is added to the Social Security Trust Fund and therefore the national debt each year and will be paid to Social Security recipients in the future. Public debt owned by foreigners has increased to approximately 50% of the total or approximately $3.4 trillion.[102] As a result, nearly 50% of the interest payments are now leaving the country, which is different from past years when interest was paid to U.S. citizens holding the public debt. Interest expenses are projected to grow dramatically as the U.S. debt increases and interest rates rise from very low levels in 2009 to more typical historical levels. CBO estimates that nearly half of the debt increases over the 20092019 period will be due to interest.[103] Should interest rates return to historical averages, the interest cost would increase dramatically. Historian Niall Ferguson described the risk that foreign investors would demand higher interest rates as the U.S. debt levels increase over time in a November 2009 interview.[104]

[edit] Monitoring the risks of increasing debt levels


Various financial indicators may provide an early warning that market forces are reacting to an increasing level of debt. Examples include Treasury security interest rates (yields), Treasury auction results, credit default swap spreads, and TIPS spreads.

Treasury note yields: A rising yield for a security of a given maturity could indicate lower demand for Treasury bonds among investors, or nervousness about future rates of inflation. The "yield curve" (a graph that relates the yields of similar securities of different maturities) provides similar information. Treasury auctions: The ease with which new securities can be sold reflects the demand for them. For example, a difference between the interest rate that debt trades prior to auction and the yield required to clear the market at auction is called the "tail." A large auction tail would be a sign of declining interest from the market. The Treasury also reports the bid-to-cover ratio for each auction, which is the number of market bids received relative to the number of bids accepted and the ratio of international buyers. Credit default swap (CDS) spreads: CDS are insurance-like derivative products that offer protection against bond defaults. CDS spreads essentially measure the current market price of insurance against default. When the market perceives a bond is at an increased risk of default, the CDS written on those bonds will increase in price. TIPS spreads: A key measure of inflation expectations among U.S. bond market investors is the difference between the yield on nominal Treasury bonds and the yield for Treasury inflation-protected securities, or TIPS. This difference is a gauge of investors beliefs about future U.S. inflation rates. A growing spread between nominal Treasuries and TIPS would indicate that investors are concerned that U.S. fiscal and monetary policy could lead to higher inflation in the future.[85]

In April 2011, rating agency Standard & Poor's (S&P) issued a "negative" outlook on the U.S. "AAA" (highest quality) debt rating for the first time since the rating agency began in 1860, indicating there is a one in three chance of an outright reduction in the rating over the

next two years. According to S&P, meaningful progress towards balancing the budget would be required to move the U.S. back to a "stable" outlook. Losing the AAA rating would likely mean higher interest rates and the sale of treasury bonds by entities required to hold AAA securities.[105] The S&P press release stated: "We believe there is a material risk that U.S. policymakers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013; if an agreement is not reached and meaningful implementation is not begun by then, this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer 'AAA' sovereigns."[106] In June, Moody's followed suit, warning that if Congress did not quickly raise the debt ceiling above $14.3 trillion, the agency might reduce the debt rating. Moody's also commented on the political process, warning that the heightened polarization on both sides increased the risk of a default.[107] However, on August 5, 2011, S&P made the decision to give a first-ever downgrade to U.S. sovereign debt, lowering the rating one notch to a "AA+" rating, with a negative outlook.[108] S&P stated that "[w]e lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process."[108]

[edit] Debates
[edit] Is there a "danger level" of debt?
Economists debate the level of debt relative to GDP that signals a "red line" or dangerous level, or if any such level exists. In January 2010, Economists Kenneth Rogoff and Carmen Reinhart stated that 90% of GDP might be an indicative danger level.[109] Reinhart testified to the U.S. Senate in February 2010, stating:[110] Our main finding is that across both advanced countries and emerging markets, high debt/GDP levels (90 percent and above) are associated with notably lower growth outcomes. Above 90 percent, median growth rates fall one percent, and average growth falls considerably more. In addition, for emerging markets, there appears to be a more stringent threshold for total external debt/GDP; when external debt reaches 60 percent of GDP, annual growth declines by about two percent and for higher levels, growth rates are roughly cut in half. Seldom do countries simply 'grow' their way out of deep debt burdens. Economist Paul Krugman disputes the existence of a solid debt threshold or danger level, arguing that low growth causes high debt rather than the other way around.[111] He also points out that in Europe, Japan, and the US this has been the case. In the US the only period of debt over 90% of GDP was after World War II "when real GDP was falling."[112] Fed Chair Ben Bernanke stated in April 2010:[113] Neither experience nor economic theory clearly indicates the threshold at which government debt begins to endanger prosperity and economic stability. But given the significant costs and risks associated with a rapidly rising federal debt, our nation should soon put in place a credible plan for reducing deficits to sustainable levels over time.

[edit] Measure of public debt

Economists also debate the definition of public debt. Krugman argued in May 2010 that the debt held by the public is the right measure to use, while Reinhart has testified to the President's Fiscal Reform Commission that gross debt is the appropriate measure. (Gross debt includes government debt held by government institutions, such as the Federal Reserve and the Social Security trust fund.) Certain members of the Commission are focusing on gross debt.[111] The Center on Budget and Policy Priorities (CBPP) cited research by several economists supporting the use of the lower debt held by the public figure as a more accurate measure of the debt burden, disagreeing with these Commission members.[114]

[edit] Is intragovernmental debt "real" debt?


There is debate regarding the economic nature of the intragovernmental debt, which was approximately $4.6 trillion in February 2011. A significant portion of the intragovernmental debt is the $2.6 trillion Social Security Trust Fund.[115] For example, the CBPP argues:[114] Debt held by the public is important because it reflects the extent to which the government goes into private credit markets to borrow. Such borrowing draws on private national saving and international saving, and therefore competes with investment in the nongovernmental sector (for factories and equipment, research and development, housing, and so forth). Large increases in such borrowing can also push up interest rates and increase the amount of future interest payments the federal government must make to lenders outside of the United States, which reduces Americans income. By contrast, intragovernmental debt (the other component of the gross debt) has no such effects because it is simply money the federal government owes (and pays interest on) to itself. If the U.S. continues to run "on budget" deficits as projected by the CBO and OMB for the foreseeable future, it will have to issue marketable Treasury bills and bonds (i.e., debt held by the public) to pay for the projected shortfall in the Social Security program. This will result in "debt held by the public" replacing "intragovernmental debt" to the extent of the Social Security Trust Fund during the period the Trust Fund is liquidated, which is expected to occur between 2015 and the mid-2030s. This replacement of intragovernmental debt with debt held by the public would not occur if: a) The U.S. runs on-budget surpluses sufficient to offset "off-budget" deficits in the Social Security program; or b) Social Security is reformed to maintain an off-budget surplus.[116] [117]

[edit] Appendix
[edit] National debt for selected years
Gross Gross as % as % End Debt GDP Debt in Debt in of GDP of GDP of Held By $Billions $Billions $Billions Low-High est. (Treas/MW, Fiscal Public OMB/BEA[97] undeflated undeflated or a Treas. OMB or Year ($Billions) est.=MW.com Treas.[98] OMB[118][119] audit Treas/BEA) 1910 2.653 8.0 2.653 8.0 est. 32.8 1920 25.95 29.2 25.95 29.2 est. 88.6

1927 [120] 18.51 1930 16.19 1940 42.97 1950 257.3 1960 286.3 1970 370.9 1980 907.7 1990 3,233 2000 (a1)5,674 2001 (a2)5,807 2002 (a3)6,228 2003 (a)6,783 2004 (a)7,379 2005 (a4)7,933 2006 (a5)8,507 2007 (a6)9,008 2008 (a7)10,025 2009 (a8)11,910 2010 (a9)13,562

50.70 256.9 290.5 380.9 909.0 3,206 5,629 5,770 6,198 6,760 7,355 7,905 8,451 8,951 9,986 11,876 13,529

19.2 16.6 44.452.4 91.294.2 54.656.0 36.237.6 33.4 56.056.4 a 57.6 a 56.6 a 59.0 a 61.8 a 63.2 a 63.6 a 64.0 a 64.8 a 69.6 a ~84.4 a ~93.4

18.51 16.19 42.97 219.0 236.8 283.2 711.9 2,412 3,410 3,320 3,540 3,913 4,296 4,592 4,829 5,035 5,803 7,552 9,023

19.2 est. 96.5 16.6 est. 97.4 42.1 96.8/ 80.2 273.1/281.7 45.6 518.9/523.9 28.0 1,013/1,026 26.1 2,724 42.1 5,735 34.7 9,821 32.5 10,225 33.6 10,544 35.6 10,980 36.8 11,686 36.9 12,446 36.5 13,255 36.2 13,896 40.2 14,394 53.6 ~14,098 62.2 ~14,508/14,512

Fiscal years 19402009 GDP figures are derived from February 2011 Office of Management and Budget figures which contained revisions of prior year figures due to significant changes from prior GDP measurements. Fiscal years 19502010 GDP measurements are derived from December 2010 Bureau of Economic Analysis figures which also tend to be subject to revision, especially more recent years. The two measures in Fiscal Years 1980, 1990 and 20002009 diverge only slightly. Absolute differences from advance (one month after) BEA reports of GDP percent change to current findings (as of January 2011) found in revisions are stated to be 1.2% 1.8% or a 95% probability of being within the range of 0.03.0%, assuming the differences to occur according to standard deviations from the average absolute difference of 1.2%. E.g. with an advance report of a $500 billion increase of a $15 trillion GDP, for example, one could be 95% confident that the range would be 0.0 to 3.0% different than 3.3% (500 15,000) or $0 to $450 billion different than the hypothetical $500 billion. Fiscal years 19401970 begin July 1 of the previous year (for example, Fiscal Year 1940 begins July 1, 1939 and ends June 30, 1940); fiscal years 19802010 begin October 1 of the previous year. Intergovernmental debts before the Social Security Act are presumed to equal zero. 19091930 calendar year GDP estimates are from MeasuringWorth.com[121] Fiscal Year estimates are derived from simple linear interpolation. (a1)Audited figure was "about $5,659 billion."[122] (a2)Audited figure was "about $5,792 billion."[123] (a3)Audited figure was "about $6,213 billion."[123] (a)Audited figure was said to be "about" the stated figure. [124]

(a4)Audited figure was "about $7,918 billion."[125] (a5)Audited figure was "about $8,493 billion."[125] (a6)Audited figure was "about $8,993 billion."[101] (a7)Audited figure was "about $10,011 billion."[101] (a8)Audited figure was "about $11,898 billion."[100] (a9)Audited figure was "about $13,551 billion."[126]

[edit] Foreign holders of U.S. Treasury Securities


Foreign holders account for approximately one-third of all holders.[127] The following is a list of the Foreign Holders of U.S. Treasury Securities as listed by the U.S. Treasury (revised by June 2010 survey completed February 28, 2011):[102] Leading Foreign Holders of US Treasury Securities December 2010 November 2010 billions of percent of total billions of percent of total Economic Area dollars (est.) foreign holdings dollars (est.) foreign holdings Mainland China 1,160.1 26.1% 1,164.1 26.4% Japan 882.3 19.9% 875.9 19.8% United Kingdom 272.1 6.1% 242.5 5.5% 1 Oil exporters 211.9 4.8% 204.3 4.6% Brazil 186.1 4.2% 189.8 4.3% Caribbean Banking 168.6 3.8% 159.3 3.6% Centers2 Taiwan 155.1 3.5% 154.4 3.5% Russia 151.0 3.4% 167.3 3.8% Hong Kong SAR 134.2 3.0% 134.9 3.1% Switzerland 107.0 2.4% 107.0 2.4% Subtotal of top 10 3,428.4 77.2% 3,399.5 77.0% holders Grand Total 4,439.6 100.0% 4,413.8 100.0%
1

Saudi Arabia, Venezuela, Libya, Iran, Iraq, the United Arab Emirates, Bahrain, Kuwait, Oman, Qatar, Ecuador, Indonesia, Algeria, Gabon, and Nigeria
2

Bahamas, Bermuda, Cayman Islands, Netherlands Antilles, British Virgin Islands and Panama

[edit] Statistics and comparisons


Lists of miscellaneous information should be avoided. Please relocate any relevant information into appropriate sections or articles. (February 2011)

U.S. official gold reserves, totaling 275.0 million troy ounces, have a book value as of 31 December 2010 of approximately $11.6 billion,[128] vs. a commodity value as of 23 January 2011 of approximately $445 billion.[129] A total of 161,000 tonnes of gold have been mined in human history, as of 2009.[130] This is roughly equivalent to 5.175 billion troy ounces, which, at $1785 per troy ounce, would be $9.2 trillion. Foreign exchange reserves $133 billion as of December 2010.[131]

United States balance of trade (19802010), with negative numbers denoting a trade deficit.

Revenue and Expense as % GDP.

The Strategic Petroleum Reserve had a value of approximately $65 billion as of January 2011, at a Market Price of $98/barrel with a $15/barrel discount for sour crude.[132] The national debt equates to $44,900 per person U.S. population, or $91,500 per member of the U.S. working population,[133] as of December 2010. In 2008, $242 billion was spent on interest payments servicing the debt, out of a total tax revenue of $2.5 trillion, or 9.6%. Including non-cash interest accrued primarily for Social Security, interest was $454 billion or 18% of tax revenue.[101] Total U.S. household debt, including mortgage loan and consumer debt, was $11.4 trillion in 2005. By comparison, total U.S. household assets, including real estate, equipment, and financial instruments such as mutual funds, was $62.5 trillion in 2005.[134]

Total U.S Consumer Credit Card revolving credit was $931.0 billion in April 2009.[135] Total third world debt was estimated to be $1.3 trillion in 1990.[136] The U.S. balance of trade deficit in goods and services was $725.8 billion in 2005.[137] The global market capitalization for all stock markets that are members of the World Federation of Exchanges was $32.5 trillion by the end of 2008.[138] The 2009 net worth of the 400 richest U.S. citizens is $1.27 trillion.[139] According to a retrospective Brookings Institute study published in 1998 by the Nuclear Weapons Cost Study Committee (formed in 1993 by the W. Alton Jones Foundation), the total expenditure for U.S. nuclear weapons from 1940 to 1998 was $5.5 trillion in 1996 Dollars.[140] The total public debt at the end of fiscal year 1998 was $5,478,189 million in 1998 Dollars[141] or $5.3 trillion in 1996 Dollars. The entire public debt in 1998 was therefore equivalent to the funds spent on the research, development, and deployment of U.S. nuclear weapons and nuclear weapons-related programs during the Cold War.[140][142][143]

[edit] Table: International debt comparisons


Gross debt as percentage of GDP 2011 2007 2010 Forecast Austria 62% 78% 82% France 70% 92% 99% Germany 65% 82% 85% Greece 104% 123% 130% Republic of Ireland 28% 81% 93% Italy 112% 127% 130% Japan 167% 197% 204% Netherlands 52% 77% 82% Portugal 71% 91% 97% Spain 42% 68% 74% United Kingdom 47% 83% 94% United States 62% 92% 100% 2 Central Europe 23% 28% 29% 3 Latin America 41% 37% 35% Sources: IMF, World Economic Outlook (emerging market economies); OECD, Economic Outlook (advanced economies)[144]
1

China, Hong Kong SAR, India, Indonesia, Korea, Malaysia, the Philippines, Singapore and Thailand
2

The Czech Republic, Hungary and Poland Argentina, Brazil, Chile and Mexico

[edit] Recent additions to the public debt of the United States

Deficit and debt increases 20012009. Recent additions to U.S. public debt[12][97][98][118] Value of Fiscal year (begins Total debt increase % of GDP % of GDP 10/01 of prev. year) $Billions $Billions $282292 4.04.2% ~$4,650 66.667.2% 1994 278281 3.8% ~4,950 67.067.8% 1995 251260 3.33.4% ~5,200 67.267.6% 1996 188 2.3% ~5,400 65.466.0% 1997 109113 1.3% ~5,500 63.263.8% 1998 128130 1.4% 5,641 61.2% 1999 18 0.2% 5,659 57.6% 2000 133 1.3% 5,792 56.6% 2001 421 4.0% 6,213 59.0% 2002 570 5.2% 6,783 61.8% 2003 596 5.1% 7,379 63.2% 2004 539 4.3% 7,918 63.6% 2005 575 4.3% 8,493 64.0% 2006 500 3.6% 8,993 64.8% 2007 1,018 7.1% 10,011 69.6% 2008 1,887 ~13.4% 11,898 ~84.4% 2009 1,653 ~11.4% 13,551 ~93.4% 2010 2011 ~633 ~14,200 ~96.8% (Oct.'10-Feb.'11)
The more precise FY 19992010 debt figures are derived from Treasury audit results. The variations in the FY 20092010 figures are due to double-sourced or relatively preliminary GDP figures.

[edit] Historical debt ceiling levels


[show]Table of historical debt ceiling levels[145]

[edit] See also


Debt levels and flows Global debt Emergency Economic Stabilization Act of 2008 part of the Troubled Asset Relief Program Fiat money History of the U.S. public debt a table containing historical debt data List of sovereign states by public debt for many nations, as a percentage of the GDP National bankruptcy

[edit] References
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[edit] Further reading