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The nation faces a hefty tab that keeps growing.
According to U.S. Rep. Rodney Frelinghuysen, the United States is increasing its debt twice as fast as its economy is expanding.
A May 25 e-mail newsletter from the Morris County Republican cited growth in debt compared with the increase in the gross domestic product, or GDP -- a measure of the nation’s economy -- in the first quarter of 2012 and said, "the U.S. is borrowing approximately $2.52 for every $1 of economic growth so far in 2012."
Really? PolitiFact New Jersey checked the congressman’s numbers and found he’s right -- down to the penny.
Let’s first discuss the different types of federal debt.
Gross federal debt includes two components: debt held by the public, which is money the government owes outside entities, and intragovernmental holdings, which is essentially money the government owes itself.
As we -- and our PolitiFact colleagues -- have noted previously, some economists prefer to focus on debt held by the public since it is money borrowed from private groups rather than gross debt.
In the time frame the congressman specified, the debt held by the public actually increased more than the gross debt. Here, we’ll note the changes in both measures of debt and compare each with the growth in the nation’s economy.
In the first three months of 2012, the gross debt grew by more than $359.1 billion to reach more than $15.58 trillion. Over the same time frame, the debt held by the public grew by $399.1 billion, totaling nearly $10.85 trillion.
According to preliminary estimates from the U.S. Bureau of Economic Analysis -- the most recent data available at the time Frelinghuysen’s e-mail newsletter was sent -- the GDP grew by $142.4 billion to reach roughly $15.46 trillion in the first quarter of 2012. Those figures are in current dollars and not adjusted for inflation.
So how does the national economy’s expansion compare to growth in federal debt?
Gross debt grew by more than $359.1 billion in the first three months of 2012, while the GDP increased by $142.4 billion. That’s $2.52 added to the debt for each $1 added to the nation’s economy.
Or for debt held by the public, it’s $2.80 in borrowing for each $1 in GDP growth.
We should note that the Bureau of Economic Analysis released updated figures on Thursday that showed slower growth in GDP. According to that data, the GDP grew by $134.6 billion in the first quarter of 2012.
Using that figure, the nation added $1 to the economy for every $2.66 it added to the gross debt.
Jason Peuquet, the research director for the centrist Committee for a Responsible Federal Budget, said Frelinghuysen’s statistic is not very surprising given the impact of the economic downturn on the federal budget. Lower revenues driven in part by high unemployment and stagnating wages, as well as increased spending on programs such as unemployment insurance and food stamps have all added "even more to deficits and debt in the near term," Peuquet said.
But, Peuquet said, "the most important fact isn’t that this is going on because this is what everyone would have predicted." More importantly, he said, "we are not on a path to have the budget recover completely once the economy does" because structural deficits will "keep piling on more and more."
Frelinghuysen said: "the U.S. is borrowing approximately $2.52 for every $1 of economic growth so far in 2012."
The gross debt grew by more than $359.1 billion in the first three months of 2012. During the same time frame, the GDP increased by $142.4 billion, according to the data available at the time of Frelinghuysen’s statement.
That’s $2.52 added to the debt for every dollar added to the nation’s economy.
We rate this statement True.
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U.S. Rep. Rodney Frelinghuysen, E-News, May 25, 2012
TreasuryDirect.gov, Debt to the Penny Calculator, accessed May 29, 2012
U.S. Bureau of Economic Analysis, Gross Domestic Product: First Quarter 2012 (Advance Estimate), April 27, 2012
U.S. Bureau of Economic Analysis, Gross Domestic Product: First Quarter 2012 (Second Estimate), May 31, 2012
GOP.gov, This Week's Trifacta, May 21, 2012
Interview with Jason Peuquet, research director for the Committee for a Responsible Federal Budget, May 30, 2012
E-mail interview with Nicole Mayerhauser, chief of the National Income and Wealth Division at the Bureau of Economic Analysis, May 31, 2012
PolitiFact New Jersey, Leonard Lance says when national debt hits $15 trillion it will equal $47,900 for every living American, Nov. 21, 2011
PolitiFact, Paul Ryan, in State of the Union response, says U.S. debt will soon eclipse GDP, Jan. 15, 2011
PolitiFact, House Speaker John Boehner has the right count on the magnitude of the federal debt, Jan. 10, 2011
PolitiFact, Boehner says federal debt will equal GDP in two years, March 26, 2010
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