National debt of the United States

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Under President Obama, the National debt has surpassed 103% of Gross Domestic Product (GDP). The Greek Debt Crisis of 2010 was precipitated when Greek debt reached 115% of GDP.[1]

The National Debt is the amount of money the United States Federal government owes various creditors due to deficit spending. As of September 30, 2014, the national debt was approximately $17.8 trillion. [2]

Contents

Debt of the US

On January 20, 2001, the day of George W. Bush's inauguration into office, the national debt of the United States was 5.7 trillion dollars, and by the end of his run in office (January 19, 2009) it was at 10.6 trillion dollars.[2] Five years into Barack Obama's term, Obama had already outborrowed Bush's entire debt load during his 8-year term at about $7.0 trillion borrowed vs. $4.9 trillion, but comparing these figures masks an important distinction—slower economic growth.

The production of the U. S. economy is measured by its gross domestic product or GDP, and its increase (and during recessions its decrease) from year to year measures economic growth (or decline) in the form of goods and services produced. GDP figures generally become more accurate over the years as more precise accounting is employed. The latest GDP measurements for recent years are from 2014.

From April 1, 2001 to March 31, 2009, the economy produced $18.4 trillion over and above March 31, 2001 GDP levels which was its productive growth for that time period. Relative to that amount, the U. S. Government went $4.9 trillion into debt for U. S. Government consumption or redistribution or an amount equal to 27% of the entire productive growth of the U. S. for that time period.

From April 1, 2009 to March 31, 2014, the U. S. economy produced $6.6 trillion over and above March 31, 2009 GDP levels which was its productive growth for that time period. Relative to that amount, the U. S. Government went $7.0 trillion into debt for U. S. Government consumption or redistribution or an amount equal to 100% of the entire productive growth of the U.S. for that time period plus six percent. In other words, for the first five years of Obama's administration, every new dollar produced by the U. S. economy above the productive level at its beginning was matched by a dollar (and six cents) borrowed on behalf of the government (over and above all federal taxes collected during that time) and dedicated to government consumption or redistribution.

Some have made the remark that under high taxation, we are slaves to the government. If slavery is defined as having all the fruits of one's production seized, it is not true that a person is a slave to the government in America, but given these facts, it is hard to deny that under the first five years of the Obama administration our country's productive growth may figuratively be one.

Debt per capita

The national debt per capita, which means what an individual's debt burden would be if each U.S. resident were assigned an equal share of the U.S. federal debt, as of September 30, 2014, was $56,000 (or $224,000 per family of four) assuming a U.S. population of about 319,000,000. The new debt accrued in the single fiscal year 2014 was $3,400 per resident or $13,700 per family of four. See table below.

Debt to GDP Ratio

Instead of measuring an absolute number, the debt to GDP ratio is the measurement of the national debt as a percentage of the gross domestic product. It is a measure of the debt in relation to the economy and of our capacity to carry and repay debt.[3] The US Debt to GDP ratio is getting larger, as the US economy's debt is growing faster than the GDP.[4] This has not always been the case: During the last 8 presidential administrations (pre-Obama), the US Debt to GDP ratio was reduced under Lyndon Johnson, Richard Nixon, Jimmy Carter, and Bill Clinton; but increased under Gerald Ford, Ronald Reagan, George H. W. Bush, and George W. Bush.

Debt Ceiling

Main Article: Debt Ceiling

The debt ceiling is a limit imposed on the Treasury by Congress. The Treasury may not issue debt in excess of this amount to fund government operations. In February 2014, the debt ceiling was suspended altogether until March 2015, and was last raised on February 7, 2014 to $17.212 trillion, a nearly 5 trillion dollar increase in less than four and a half years in spite of attempts by conservative Congressmen to reduce spending.[5] Raising the debt ceiling is not the same thing as spending more money, since spending is dictated by the Federal Budget, but it does allow the Federal Government to meet any existing financial obligations. It is not certain what would happen if the national debt reaches the debt ceiling without action by Congress. Liberal politicians and pundits, including Treasury Secretary Timothy Geithner, claim that government would default on its obligations, causing global financial markets to collapse. Many financial market experts and conservatives, especially TEA Partiers opposed to raising the debt ceiling, see no evidence that a default would occur in such a situation.[6] However, in 1983, when Congress was debating whether to raise the debt ceiling, Ronald Reagan said:

“The full consequences of a default — or even the serious prospect of default — by the United States are impossible to predict and awesome to contemplate. Denigration of the full faith and credit of the United States would have substantial effects on the domestic financial markets and the value of the dollar in foreign exchange markets. The Nation can ill afford to allow such a result. The risks, the costs, the disruptions, and the incalculable damage lead me to but one conclusion: the Senate must pass this legislation before the Congress adjourns.”[7]

Notes

Recent additions to U.S. public debt[2][8][9] [10]
Fiscal year (begins
Oct. 1 of year
prior to stated year)
GDP
$Billions
New debt
for
fiscal year
$Billions
% of GDP Total debt
$Billions
% of GDP
(Debt to GDP
ratio)
U.S.
Popul-
ation
millions
New debt for
fiscal year
per family
of four
$dollars
1994 $7,200 $281–292 3.9–4.1%~$4,65064.6–65.2%264~$4,300
1995 7,600 277–281 3.7%~4,95064.8–65.6%267~ 4,200
1996 8,000 251–261 3.1–3.3%~5,20065.0–65.4%270~ 3,800
1997 8,500 188 2.2%~5,40063.2–63.8%2742,750
1998 8,950 109–113 1.2–1.3%~5,50061.2–61.8%277~ 1,850
1999 9,500 127–130 1.3–1.4%5,65659.3%280~ 1,600
2000 10,150 18 0.2%5,67455.8%283 256
2001 10,550 133 1.3%5,79254.8%2861,860
2002 10,900 421 3.9%6,21357.1%2885,840
2003 11,350 570 5.0%6,78359.9%2917,840
2004 $12,100 $ 596 4.9%$ 7,37961.0% 294$ 8,120
2005 12,900 539 4.2%7,91861.4%2967,280
2006 13,700 575 4.2%8,49362.1%2997,690
2007 14,300 500 3.5%8,99362.8%3026,620
2008 14,750 1,018 6.9%10,01167.9%30513,400
2009 14,400 1,887 13.1%11,89882.5%30824,500
2010 14,800 1,653 11.2%13,55191.6%31021,300
2011 15,400 1,230 8.0% 14,78196.1%31215,800
2012 16,050 1,278 8.0% 16,059100.2%31516,300
2013 16,600 673 4.1% 16,732100.9%3178,500
2014 ~17,250 ~1,092 ~6.3% ~17,824~103.3%319~13,700


The symbol "~" means "about" or "approximately".
On June 25, 2014 the BEA announced a 15-year revision of GDP figures would take place on July 31, 2014.
The figures for this table were corrected [1] on that day with changes to FY 2000, 2003, 2008, 2012, 2013 and 2014.

The more precise FY 1999–2013 debt figures are derived from Treasury audit results.

The variations in the 1990s and FY 2014 GDP figures are due to double-sourced or
relatively preliminary GDP figures, respectively.

The U. S. Bureau of Economic Analysis performed a revision of GDP figures in 2013.

References

  1. United States Congress, Congressional Budget Office (July 27, 2010). "Federal Debt and the Risk of a Fiscal Crisis". www.cbo.gov
  2. 2.0 2.1 2.2 United States Department of the Treasury, Bureau of the Public Debt (December 2010). "The debt to the penny and who holds it". TreasuryDirect. Retrieved April 8, 2014.
  3. The Skeptical Optimist (January 29, 2005). "National debt burden: full history". TSO (The Skeptical Optimist).
  4. Steve McGourty United States National Debt (1938 to Present) May 6, 2007
  5. "H. J. Res. 45 (111th): Increasing the statutory limit on the public debt" (2010). govtrack.us. Became Public Law 111-139: Statutory Pay-as-You-Go Act of 2010.
  6. Hurlbut, Terry A. (May 16, 2011). "Debt ceiling reached, sky does not fall." Conservative News and Views
  7. Thepresidentialcandidates.us (May 17, 2011). "Ronald Reagan on raising the debt ceiling". 2012 The Presidential Candidates
  8. United States Department of the Treasury, Bureau of the Public Debt (2010). "Government – Historical Debt Outstanding – Annual". TreasuryDirect. Retrieved January 16, 2011.
  9. The Executive Office of the President of the United States, Office of Management and Budget (February 14, 2010). "Historical Tables: Table 7-1; 10-1", The White House. Retrieved February 15, 2010.
  10. United States Department of Commerce, Bureau of Economic Analysis. "National Economic Accounts: Gross Domestic Product: Current-dollar and 'real' GDP". BEA.gov. Retrieved July 31, 2014.

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