8%: Gross U.S. public debt as a share of annual economic output.
There’s little doubt that the U.S. needs to get its mounting debts under control. But at what point do they become a clear and present danger?
By some measures, we’re reaching that point about now. As of Friday, our total national debt – the sum of all outstanding IOUs issued by the U.S. Treasury – stood at a bit more than $13 trillion, or almost 90% of our projected gross domestic product for 2010.
The 90% level is significant, because recent research by economists Carmen Reinhart and Kenneth Rogoff suggests that once a developed nation’s debt crosses it, its annual economic growth tends to be about one percentage point lower. At a time when economists are saying it could take years for the U.S. to bring unemployment back down to pre-recession levels, that percentage point could make a big difference.