Paul Wiseman, AP Economics Writer
WASHINGTON (AP) — Wealthy countries all over the world are dealing with debts and strained budgets as they mop up after the Great Recession and brace for the budget-busting retirement of the baby boomer generation.
But the United States is in a bigger fix than almost anyone else.
The U.S. federal debt was equal to 95% of the overall economy in the first three months of 2011, the fifth-highest on the Associated Press Global Economy Tracker, an analysis of economic and financial data from 30 of the biggest economies.
Every year that the U.S. government spends more than it collects in taxes, it records an annual budget deficit. The $14.3 trillion debt is the sum of all annual deficits and surpluses.
As U.S. policymakers argue over raising the federal borrowing limit and slashing debts, America is hobbled in ways the others are not. Tax collections are low by historical and international standards. Health care costs are astronomical — and still rising. The political system is gridlocked.
Those problems suggest the current impasse over raising the U.S. government's borrowing limit and cutting the deficit is a prelude to even more intense political combat.
"We as a society will either have to pay more for our government, accept less in government services and benefits, or both," says Douglas Elmendorf, director of the nonpartisan Congressional Budget Office. "For many people, none of those choices is appealing — but they cannot be avoided for very long."
This year's federal tax revenues are forecast to equal 14.4% of gross domestic product, a broad measure of economic output, according to the Office of Management and Budget.
That's the lowest share since 1950, long before Congress approved expensive programs such as Medicare. Tax collections have been reduced by the recession and by tax cuts enacted in 2001 and 2003. Among 29 countries ranked by the Organization for Economic Development and Cooperation, only Japan and Spain take in less tax revenue than the U.S. as a percentage of GDP.
When it comes to health care, the U.S. spends the equivalent of 17.4% of its GDP — by far the highest percentage among wealthy nations. The next highest is the Netherlands, where health care spending equals 12% of GDP. Among the 34 wealthy countries that belong to the OECD, health care spending averages less than 9.5 % of GDP.
Political gridlock magnifies America's debt woes. Among the five biggest countries with a top AAA rating from the credit rating agency Moody's, the U.S. is the only one that hasn't come up with a serious plan to control government debt, says Moody's sovereign debt analyst, Steven Hess.