Critical debt levels

The US needs to start living within its means. What that means is made painfully clear by the French PM this week. With a population (a tad over 60 million) and GDP (around 2 trillion USD) about one fifth of the US, it runs a deficit of around 50 billion USD, a level which the prime minister calls "critical". Of course, the US runs a bare public deficit of 250 billion USD (federally), proportionally the same.

Keep in mind that the US is still at a huge demographic advantage over France, with the baby boomers still being at prime earning potential. So it is obvious that the US national debt is beyond critical. One of the ways that this can be made more apparent is to look at the deficit without the surplus in social security: about 430 billion USD last year. Add to that the fact that the US states run deficits as well (California ALONE ran a 6 to 7 billion USD deficit last year, but it has run deficits as high as 30 billion USD in recent years), as do US households (total consumer debt expanded by about 60 billion USD in 2006, of which 25 billion was run up on credit cards), and you see the extent of the problem. Incidentally, total US household credit runs at well over 90% of GDP (including mortgages and such).

It's fun maxing out on credit while it lasts. And it's a hard habit to break. But how long can it persists?