If one were to make a quick comparison of the US budget situation to that of the other highly indebted nations, would the US stand out? Most rightfully point to the deficit number. It's a horrible situation for the US, though if measured as a percentage of the GDP, the US' 8.6% number is not materially different from say Japan, the UK, and Greece, though higher than Spain, Portugal, and particularly Italy (which is just under 4%). It's sad, but at least the US has some "company" in its "misery".
But this deficit comparison breaks down if the governments' revenue is viewed as a percentage of what it spends. On that basis, the US is actually worse than any of the Eurozone periphery nations as well as the UK and Japan. The US government generates some 65 cents for every dollar it spends, while even Greece has managed to keep that number above 80 cents.
|Government revenue as % of the amount spent, 2011 (source: Capital Economics)|
The same holds true for the absolute level of debt. Taken as a percentage of the GDP, the US comfortably falls between Ireland and the UK (though materially worse than Spain). However with the total debt taken as percentage of government revenue, the US is again an outlier.
|Government total debt (source: Capital Economics)|
The US government revenue is simply way too small relative to what it spends and what it owes. The fact that the US has a high GDP on an absolute dollar basis tends to mask these statistics. It's easy for many US pundits to criticize the irresponsible spending practices of the Eurozone periphery governments. But once in a while it is worth also taking a look at what by some measures may be the most irresponsible spender in the developed world, the US government.