Fiscal Cliff: $607 Billion Automatic Budget Deficit Reduction

Reuters shows in this graph the reduction in the budget deficit that will take place automatically when Democrats and Republicans in Washington don't reach an agreement before the end of the year about how to avoid the fiscal cliff. The biggest part of the reduction comes from the Bush-era tax cuts that expire: 221 billion dollar. Payroll tax relief expiring (95 billion) is also a big tax increase. One of the budget cuts is that Emergency Unemployment benefits will expire.

Will Washington let this happen?

Reuters

United States Federal Income And Expenses (2011)

Income tax and payroll tax (which employers hold from wages, also social security contributions) are the major sources of income for the United States fedral government. 

This income is then used mostly for Medicare, Medicaid, Social Security and Defence.

Non-financial U.S. Total Debt

This graph, with data from the United States Federal Reserve, shows the total Credit Market Debt Owed. In other words, this is the total debt outstanding in the United States. That includes both public and private debt, with private debt consisting of households, financial companies and non-financial companies.

You can see that since the 1970s the growth of total debt (red line) started to exceed the growth in the national income. Now total market debt is about four times as high as the national income (GDP).

Business Insider

United States National Debt Accumulated by President

This graph from Reuters shows the Government Debt Accumulated in the United States in a bar graph.

Reuters

This graph from Der Spiegel shows how much of the United States national debt is accumulated by each president in a pie graph. So far under president George W. Bush the most debt has been added.

Der Spiegel

United States National Debt Will Explode

Fiscal consolidation is not only needed to bring down current debt levels and the high fiscal deficit of 9 percent in the United States. Without radical reforms in Medicare, Medicaid and Social Security which will mainly cause the rise in debt, the Government Debt will actually explode to 350% in 2050.

In fact entitlement spending will consume all tax revenues by 2049.

Heritage

United States National Debt Accumulated by President

This graph from Reuters shows the Government Debt Accumulated in the United States in a bar graph.

Reuters

This graph from Der Spiegel shows how much of the United States national debt is accumulated by each president in a pie graph. So far under president George W. Bush the most debt has been added.

Der Spiegel

Graph: United States Debt Deal

Yesterday the United States Government Debt Deal to raise the debt ceiling was signed by president Obama after it passed both the House and the Senate. 

• The deal will allow president to raise the debt ceiling by at least 2.1 trillion dollar.
• Total of 2.4 trillion dollar budget savings over 10 years.
• Of which 917 billion dollar in discretionary (optional) spending now, including 350 billion dollar on the defense budget.
• A 12-member congressional committee will fill in the rest of the 1,5 trillion dollar by November 23. Congress will vote about the results on December 23.

Amount Of United States National Debt Per Continent

The Washington Post made a great graph of the part of the national debt that is hold by foreigners (31.6 percent of the United States Government Debt as I showed in my post today) per continent.

• The pink part is Asia's part: Asia holds 3 trillion, of which China holds 1 trillion and Japan 907 billion.
• Light blue is Europe: Europe holds 1 trillion, with Britain holding 333 billion and Switzerland 112.4 billion.
• Yellow is the Middle East, which hold 292 billion. The oil-exporting countries hold 222 billion.
• North America in green holds 253 billion, of which the Caribbean Banking Centers hold 138 billion.
• South America in purple holds 245 billion.
• The rest of the world holds 212 billion.

Washington Post