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Good News: Household Debt Is Falling; Federal Taxes Will Not Rise.

Written by Gary North on June 21, 2014

We are told that household debt is a crushing burden in the United States. The statistics do not bear this out.

Average household credit card debt is about $7,000. Half of Americans have zero credit card debt. For those American households that have credit card debt, the figure is $15,000. But this is down from $19,000 in 2009. See the chart here:


We are told that total household debt – mortgages and revolving credit – is high and rising. On the contrary, it is low and falling. If you look at the statistic that families look at, it is this one: the percentage of disposable (after-tax) income devoted to debt repayment. It never goes above 13%. These days, it is under 10%. The chart is here:


Do not pay attention to forecasters who say that household debt is a terrible burden. It isn’t. Corporate debt may be too high. Federal debt is clearly too high. But households have things under control. This is not other people’s money.

Then there is this slogan, heard every four years. “Federal taxes are going to go up if [some politician] is elected President.” Taxes go up, no matter who is elected. But they do not go up faster than GDP goes up.

The ratio of tax revenues to GDP has only gone above 20% once in American history, in 1944, the last full year of World War II. It reached 21%. It went below 21% in 1945, and it has never exceeded this since. The chart is here:


What do these three charts tell us? First, most Americans are sensible about personal debt. They understand that the must make monthly payments. They do not let their debt get out of hand.

Second, voters have Congress on a tight leash. Congress does not have the courage to hike taxes above 20% of GDP. If Congress wants to spend more, it must borrow.

Don’t worry about rising household debt and the ability of the federal government to increase its share of GDP through direct taxation.

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6 thoughts on “Good News: Household Debt Is Falling; Federal Taxes Will Not Rise.

  1. The people that were riding high on a flourishing economy didn't worry to much about credit card debt. But now after six years of virtually zero growth, people with good sense and those with diminishing income, sometimes both, realize sanity must prevail if they are to survive financially. Americans have learned a tough lesson that, I fear will be soon forgotten when things turn around. See my blog at http://cranky-conservative.blogspot.com

  2. KellyMan says:

    Of what world is this article speaking? I am retired (still work a part time teaching job at the college level) and I have always worked hard and well according to my evaluations. The part time job is causing me to pay more taxes on my Social Security and State retirement benefits. I am literally paying because I enjoy the academic environ and opportunity to teach at that level. Why am I being punished for trying to survive?_My property tax was raised by my county's elected supervisors 4% by a 7-0 vote two months ago.. My electric bill has gone up for me from $260/month budget plan to $483/month said plan in the past 12 months (Just a picked item

  3. CaptTurbo says:

    If there is any truth in this it's simply that Americans know that we are completely screwed under the communist Kenyan Muslim usurper and won't use their credit cards since they realize that the music has stopped and they are just scrambling for a chair.

  4. A lot of people now understand that getting loans in the form of credit card is not good for their relaxed life and now they are getting better at using their money according to their own debts. That is the reason now people have money that they can spend on their own home and the people who do not have their own homes buy the home.

  5. 1baronrichsnot1 says:

    Half of the households have zero debt because they have no credit, they didn't pay their bills, because they lost their assets and "money" and jobs in the crash! Approximately half of the people were responsible enough to somehow keep their jobs, avoid layoff, avoid bankruptcy, declared disability, took earned retirement, etc. still have the credibility to recieve credit! It's easy to understand, bad debts were written off, but left the debtor with bad credit ratings! Think about it, if a guy stiffs you, wants more money, you gonna loan it to him? He defaulted, declared bankruptcy or just told you to kiss off. Thats the reason it appears that debtors have eased off! They don't have the opportunity to borrow, the bankers of malfeasance who perpretrated this crime of cards and the shell game of certificates of debts on homes, issued by Freddie and Fannie, sold worldwide, guaranteed by the gov't, has been covered by printing money! Someday they will have filled this hole, we will owe 39 trillion dollars in federal debt certificates(notes/money) that will be so near worthless that no one will want it!

  6. 1baronrichsnot1 says:

    You are a producer, a responsible citizen, you pay your debts, You are the target of the 50% who didn't, they want it, cause they can't wurvive on their own, they are non productive and financial illiterates! The gov't you have worked for for years is now calling on you to support their fiscal irresponsiblility mostly created by the banks financing ninjas, selling the loans to Fannie and Freddie mac.then selling gov't guaranteed debt all around the world on the homes of these ninjas! Of course you know that was an illegal pyramid. They will allow you to work, most don't want to work! Take heart, it isn't all that bad, you can only work until you drop, and that isn't illegal, cannableism is though, so at least they can't legally eat you!