OECD Report: U.S. one of the most indebted nations in the world

Posted: 2015-07-22

By Karen Beseth  /   July 10, 2015 Citizen Watchdog

SWEAT THE DEBT: A new report released by the OECD ranks the U.S. as the sixth most indebted advanced economy in the world.

Greece is making headlines lately for its debt crisis, but the United States isn’t that far behind when it comes to federal debt.

According to a new report released by the Organization for Economic Cooperation and Development (OECD) the United States ranks number six on the list of the most indebted advanced economies in the world.

In 2007, the ratio of debt-to-Gross Domestic Product (GDP) in the U.S. was under 76 percent. By 2014, the U.S. debt-to-GDP ratio rose to an astonishing 122.6 percent. Unfortunately, this measure does not take into account unfunded obligations such as Social Security or Medicare, so the situation is arguably much worse than this report indicates. But it is still pretty dire.

The only countries that top the U.S. when it comes to debt-to-GDP are Greece (181 percent), Italy (156 percent), Portugal (149 percent) Belgium (129 percent) and Ireland (127 percent). Japan probably would have topped the list but the last year data was available was 2012 when Japan’s national debt was a whopping 235 percent of its GDP.

The OECD’s outlook for the U.S. economy has improved somewhat, but the report does indicate that there continue to be drags on the recovery. According to the report, “the recovery has hit a soft patch” and although the labor market has improved somewhat, “wage acceleration to date has been modest and not broadly based.” In other words, American workers are not seeing their wages rise.

Currently, the U.S. national debt is nearly $18.3 trillion, but the OECD predicts that the debt will stabilize to around 110 percent of GDP in the next year or two due to “cyclical developments” before accelerating again by 2018 “largely driven by healthcare spending and, to a lesser extent, social security.”

Out of all of the OECD countries, Estonia has the lowest debt-to-GDP ratio at 14 percent. And for our continental neighbors, Canada’s national debt comes in at 105 percent of GDP, while Mexico’s ratio is 37 percent.

The OECD looks at a number of key indicators, including public finance and economics, public employment, human resource management, budgeting practices and procedures, public sector integrity, regulatory governance, and service to citizens. According to the website, the purpose of the study is to help governments make informed decisions and restore confidence in government institutions.

“While measuring government performance has long been recognized as playing an important role in increasing the effectiveness and efficiency of the public administration, following the economic crisis and fiscal tightening in many member countries, good indicators are needed more than ever to help governments make informed decisions regarding tough choices and help restore confidence in government institutions.”

With a debt-to-GDP ratio of 122.5 percent, and no real plans to rein in spending, it might be tough for American citizens to regain confidence in U.S. government institutions.

This article was written by a contributor of Watchdog Arena, Franklin Center’s network of writers, bloggers, and citizen journalists.

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