Since 9/11, the government and most individuals are in weaker financial health, government has aggressively expanded, and the United States appears to be in a weaker position as a global superpower. That said, the United States still remains unmatched militarily, and still has the highest GDP on the planet.
Weaker Financial Health
Since 9/11, America’s financial health has deteriorated. Its credit rating has declined from AAA status to AA+. Debt as a percentage of GDP has risen from 32.5% to 72%, and total debt has nearly tripled from $5.8 trillion to $14.7 trillion. The U.S. went from running a 1.3% surplus in FY2001 to a 10.9% deficit in FY2011.
The average American has also experienced a real decline in income. In 2001, the median income in constant 2009 dollars declined from $51,161 in 2001 to $49,777 in 2009. Meanwhile, the price in constant dollars to attend a four-year college has grown by 28% from 2001-02 to 2009-10.
Americans investing in the stock market lost money in real terms from 2001 to 2011, with the S&P 500 growing at a compound annual growth rate of 0.55% in nominal terms.
Despite popular opinion, aggregate income distribution has remained roughly flat from 2001 to 2009. In 2001, the top 5% of families earned 21.0% of the country’s aggregate income. In 2009, that number dropped slightly to 20.7%. Furthermore, the United States’ Gini ratio (a measure of inequality) increased by only 1.8% from 0.435 to 0.443.
Bigger Government
By most measures, there has been a dramatic expansion of the federal government since 9/11. In FY2001, government represented 18.2% of GDP. By FY2011, it had grown to 25.3% of GDP, primarily driven by a massive expansion of both military and entitlement programs. The defense budget nearly tripled from FY2001 to FY2011, and the total number of active military personnel grew by 3.6%, as the United States fought three wars simultaneously. Food stamp participation also nearly tripled from 17.3 million to 45.2 million people. The number of Social Security recipients also increased by over 50% from 2001 to 2011. Finally, the number of Medicaid participants increased 47% between 2001 and 2010, with a projected further 5.4 percent increase in 2011 according to a recent report by the National Association of State Budget Officers.
The United States Remains a Superpower with Diminished Capability
Not only has the U.S. government’s fiscal health diminished, but also the country’s broader economic situation has weakened. While the United States has increased its debt by 154%, its GDP has only grown by 45.5%.
The United States has also ceded certain elements of prestige. For instance, in 2001, the United States had 4 space shuttles. Today, it has none. Its nuclear arsenal included over 6,000 warheads in 2001. Now, it likely has less than 2,000. Meanwhile, the world added one new member to its nuclear club during the past decade bringing the total number of nuclear powers to 9.
A comprehensive chart outlining many of these key differences is included below:
