Thursday, August 4, 2011

US debt tops 100% of GDP: Treasury

US Treasury Secretary Timothy Geithner (C) walks to the Rose Garden at the White House before US President Barack Obama made a statement to the media about the passing of a bill raising debt-ceiling and cutting spending in Washington, August 2, 2011.

Source: Press TV

The US Department of the Treasury says the country's debt has topped 100 percent of its gross domestic product amid concerns over the slow pace of economic recovery.

Washington's gross debt rocketed $238 billion on Tuesday to reach 100 percent of its GDP immediately after US President Barack Obama signed into law the congress legislation to raise the country's borrowing ceiling, AFP reported on Wednesday.

On Tuesday, Obama voted in favor of a controversial bipartisan plan to raise the debt ceiling of the United States in exchange for spending cuts, just hours before the first ever default in US history.

The US Treasury figures show the new borrowing has increased Washington's total public debt to $14.58 trillion, which stands higher than the end of 2010 GDP of $14.53 trillion.

It has also put the US within a coterie of countries whose public debt exceeds their GDP, including Japan (229 percent), Greece (152 percent), Lebanon (134 percent), Italy (120 percent), and Ireland (114 percent).

According to the default-preventing compromise bill, the US debt ceiling was raised by $2.4 trillion, to reach a total of $16.7 trillion.

With its colossal debt topping its GDP, the United States is now also within the group of highly indebted countries like Italy and Belgium.

The last time America's debt surpassed the size of its annual economy was in 1947, two years after the end of World War II.

Credit ratings agencies such as Moody's Investors Service, have warned Washington to reduce its debt-to-GDP ratio quickly, otherwise it may face losing its triple A rating.

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