Comparing the US government debt to the size of the economy is a misleading statistic.

The size of the US economy effects the government in that theoretically the government could collect more taxes from a larger economy. The problem with this theory is that tax rates are falling. Most people in America feel overtaxed and politicians are all promising lower taxes. Therefore even if the size of the US economy grows, tax income may not.

The US Government’s debt should be compared to the government’s ability to pay off that debt. Economists should be looking at interest obligations in relation to current assets, yearly revenues, cash flow, interest rate risk, etc. Comparing the size of government debt to the size of the economy comes from the sense that the government owns or controls the economy. Economists look at the US economy as if it was an asset of the US government. This would be like Time Warner comparing the size of its debt to the size of the communications industry.

The US government debt shrinking in size compared to the size of the US economy shows that US businesses are growing faster than the US government is going into debt. This may be a tribute to the success of US businesses, but is not necessarily a sign that the US government has its financial house in order.

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