Simple Explanation: Why Excessive Government Debt is Bad

As the budget battle continues on Capitol Hill without resolution, alarming spending numbers have not relented. The Federal Government’s February deficit proved to be the largest monthly shortfall in history, coming in at $223 billion.

To add perspective, this monthly deficit is larger than the entire fiscal year deficit in 2007, the year before the recession began. The graph below shows the debt crisis on a global scale.

Despite the severity of the budget crisis, senate Democrats have continued to block GOP efforts to cut more than $50 billion and are willing to concede less than $6 billion from the budget.

Historically, economies globally have suffered when the ratio of debt to GDP reaches above 90 percent. The U.S. federal debt is currently at 93 percent of GDP. The graph below makes it very clear how dangerous this can be.