What Everyone Should Know About the “Debt Crisis” in the U.S.

by Mark Weisbrot

Since the U.S. “Debt Crisis” has been a big international story for the last few weeks, it is worth clarifying what is real and what is not. First, the U.S. government does not have a “debt crisis.” The U.S. government is paying net interest of just 1.4 percent of GDP on its public debt – this is not much by any historical or international comparison. The relatively large annual deficit at present (9.3 percent of GDP) is overwhelmingly the result of the recession and weak recovery. The long-term deficit projections are driven by health care costs in the private sector. These spill over into public spending because the U.S. government pays for almost half of health care spending, at a rate that is twice as high as other developed countries – and rising fast.