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Huntsman Debt Rule Wrong on French-German Growth (Bloomberg)

December 1, 2011

Senior fellow Liliana Rojas-Suarez was quoted in a Bloomberg article on Jon Huntsman's debt argument.

From the Article

Countries with high rates of public debt can still maintain economic growth, contrary to the argument of Republican presidential candidate Jon Huntsman.

The BGOV Barometer shows that some nations with debt levels exceeding 70 percent of their gross domestic product, the threshold cited by Huntsman, continue to expand, among them Germany and France.

“I’d argue that 70 percent debt-to-GDP is a national security problem, because at some point, you just don’t grow any more when your debt becomes that,” Huntsman said at a Nov. 22 debate with other GOP candidates. “I mean, look at Japan. They’re in their third decade of lost growth. Look at Greece, look at Italy.”

In the U.S., the world’s largest economy, marketable debt held by the public is equivalent to 63 percent of GDP. Counting government securities held by other federal agencies, the total approaches 100 percent of GDP. The U.S. economy grew 1.5 percent in the third quarter from the same period last year.

Japan, whose 200 percent debt-to-GDP ratio is the most of any developed country, showed no growth in the third quarter. Greece, at 143 percent, shrank 5.2 percent over the same period. In addition to the countries mentioned by Huntsman, Portugal is saddled with 93 percent debt-to-GDP and its economy contracted 1.7 percent over the 12 months through September.

Read it here.

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