The national debt will exceed the size of the economy this year — a first since World War II, according to a recent Treasury Department report. A year ago, the department had estimated that dubious distinction wouldn’t be achieved until 2014.
 
Now the expectation is that the ratio of total debt to gross domestic product (GDP) will top 102 percent this year, up from the earlier estimate of 96.4 percent, CNNMoney reported.
 
Two factors are likely the biggest cause.
 
First, the White House’s 2011 GDP estimate is $219 billion lower today than it was a year ago, which raises the ratio barring a corresponding decrease in debt.
 
Second, the debt grew larger because of a tax cut deal brokered by President Barack Obama and Republicans last December. That deal will add an estimated $858 billion to the deficits over a decade — $410 billion of it in 2011 alone, according to the Congressional Budget Office (CBO).

Republican Dave Camp, the lead tax writer in the U.S. House, said Monday that the latest Treasury numbers are a clear indication “why any increase in the debt limit must be paired with significant spending reductions and real entitlement reforms.”

Though Republicans criticize Obama for spending too much, in fact tax cuts would drive most of the debt under Obama’s 2012 budget proposal, according to the CBO.

That’s why some deficit hawks on the left and the right advocate letting the tax cuts expire. Better yet, replace them with something superior, said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, who noted that this month marks the 10-year anniversary of the 2001 cuts.

“Given that our current tax code is so crummy and our fiscal situation so dire, on this 10-year anniversary, a perfect gift would be a plan to reform the tax code and bring down our debt,” MacGuineas said.