Saturday, March 8, 2014

Why America Can't Afford Another Cold War

Russian national debt, 2012: $253 billion [source:]

U.S. national debt, end of 2013: $17 trillion

A trillion is a thousand billions. Russia's debt was about 1/4 trillion.

America's debt is (or was recently) about 68 times as large as Russia's.

The American economy is also larger, so could service more debt.

Russian GDP (gross domestic output), was $2 trillion in 2012, per the IMF.

U.S. GDP was 15.7 trillion in 2012 so about 8 times as large as Russia's.

In other words, in relation to the size of their respective economies, the U.S. had about 8 times as much national debt as Russia.

Using other statistics, the debt of the Russian government is just 11% of its annual GDP. The The debt of the U.S. government is 101% of its annual GDP. [per Wikipedia, economy of Russia and economy of United States pages]

By my figuring, the U.S. government is already bankrupt, but no one wants to admit it. It cannot raise taxes significantly, its budget can't be cut further without widespread social unrest, and it cannot pay down the national debt, and won't even be able to pay the interest if rates rise to normal levels.

The U.S. is not exactly a paper tiger, but it is a deeply indebted tiger. If anyone blows a few U.S. aircraft carriers out of the water, there would be no money to replace them. Russia is one of the few nations that can blow U.S. vessels out of the water. The carriers should be saved to bully developing nations, their traditional role.

We can't even afford military posturing or a buildup in our number of troops. We have to keep the peace.

This essay is in response to Why Russian Can't Afford Another Cold War by James B. Stewart in the New York Times.

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