US debt could increase by USD 2 trillion this year

Updated on: 04 January,2009 07:24 AM IST |
PTI |

The US national debt is expected to jump by as much as USD 2 trillion this year, thus putting more pressure on the American economy, a leading daily here said yesterday.

At present, the country's debt stands at nearly USD 10.7 trillion.

Of this USD 3 trillion is held by foreign investors, with China (USD 652.9 billion) and Japan (USD 585.5 billion) being the top two creditors.

The soaring national debt would saddle taxpayers with huge new interest payments for years to come, the Washington Post said.

"Some analysts also worry that foreign investors, the largest United States creditors, may prove unable to absorb the skyrocketing debt, undermining confidence in the US as the bedrock of the global financial system," the Post wrote.

The newspaper said economists from across the political spectrum have endorsed the idea of going deeper into debt to combat the worst ever economic crisis since the Great Depression of last century.

They argue that even with an increase of USD 2 trillion national debt, the United States is in relatively good financial shape as compared to other industrial nations.

Japan's public debt equaled 182 per cent of its GDP in 2007 and that of Germany was 65 per cent, the newspaper said referring to a forthcoming report by Scott Lilly, a senior fellow at the Center for American Progress.

Even a USD 2 trillion increase would push the US debt to about 53 per cent of the overall economy. This is "only a few percentage points above where it was in the early 1990s," Lilly was quoted as saying by the newspaper.u00a0u00a0u00a0u00a0u00a0u00a0u00a0u00a0u00a0u00a0u00a0u00a0u00a0u00a0u00a0u00a0u00a0u00a0u00a0

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