As the size of the nation’s debt grows to levels never seen before, Wall Street is starting to sound the alarms, saying that we need to keep the debt growth in check, or suffer a longer recession. Private firm will not be able to compete with the government in spending, washing away their ability to create wealth. We are also putting greater obligations on future generations to replay today’s debt.

As Tax revenues were continue to decrease, 14% in the first half of the fiscal year, the government will be forced to look for other ways to fund operations, and keep the country open for business. The question is how much can the United State afford to barrow before it collapses under its own weight.

Breakdown: Unprecedented Spending

·          Bank bailouts

·          Detroit rescues

·          Health care overhaul

·          Stimulus plans

Breakdown: Yield

·          10-year Treasury notes rose to its highest level since November, to 3.17%

·          Investors are demanding larger returns

·          Low by historical standards – Averaged about 5.7% in the late 1990s

As the economy stays in recession, for the first six months of the current fiscal year, federal deficit is running at $956.8 billion or about one seventh the gross domestic product (GDP). These levels have not been seen since World War II.

The debt which is held by the public is expected to go from 41% of GDP in 2008 to 51% in 2009, and will peak at 54% in 2011 at which point it is expected to declining the following years.“For all of 2009, the administration probably needs to borrow about $2 trillion.”

“Congressionally mandated debt ceiling of $12.1 trillion will most likely be breached in the second half of this year.”

Breakdown: Interest Payments

·          Interest payments to more than quadruple in the next decade

·          $806 billion by 2019 from $172 billion next year

Read Article: Worries Rise on the Size of U.S. Debt