Let's Talk ... National Debt

For a few years I have watched our National Debt as it soared at a frightening rate, much like watching a teenager with a credit card. A basic description of our nation’s debt is what money our government has borrowed from sources, such as private investors, different federal agencies, and other nations. The ability to pay that back is a comparison of our gross domestic product (GDP) to debt ratio. Financial experts start to worry when a country’s debt reaches 77% of that country’s GDP. As they worry about that country’s ability to repay that debt, or at least make reasonable payments.

My reason for writing this is to make people aware of just how dire our nation’s debt is. As a teenager, I remember a friend’s dad that was pinned with his grandma’s debt. She was dying from cancer and didn’t tell anyone. She was charging up a storm before she died and his dad wound up bailing out grandpa. She knew she was dying and didn’t have to worry about it. I feel it is necessary for people to understand where we stand before throwing more money at the problems. Consider this as our representatives pull more money out of the fiscal hat.

Since the birth of our nation, debt has been present and borrowing from other nations has always been present. After the Revolutionary War, we owed $75 million dollars. About 30% of our GDP. By the time of the War of 1812, our debt was down to about 10% of our GDP.

By the time Andrew Jackson became president in 1828, our national debt had risen to about $58 million dollars. President Jackson managed to pay off our debt by 1835. He accomplished this miracle by selling off federally owned land. That was the last time our government would be fiscally responsible. A year later the United States would fall into a recession and once again, borrow money, never looking back. Fiscal responsibility became a cry for elections. Today’s politician doesn’t even bother with that talking point.

Every crisis raised the debt. By the time the Civil War ended, our national debt was about $2.7 billion dollars (roughly $42 billion in today’s money) or about 30% of GDP again. At the start of the 1898 Spanish War, our debt was $1.5 billion, after the war, it was $2.13 billion. America’s debt stayed under $3 billion until WW1. By the end of WWI it had ballooned to $27.5 billion. Before WWII it was about $19.5 billion, by the end of WWII it reached $269.4 billion or 113% of our GDP. By 1974, that debt was brought down to 24% of our GDP. With the expansion of defense and social program spending, our debt reached 50% of our GDP. As this expansion continued, we crossed the $1 trillion dollar mark by 1982. Tax increases by both President H.W. Bush and President Clinton brought that ratio down to 33% by 2001. That will be the last time. After 9/11 and with the Middle East War, our national debt to GDP ratio hit 100% in 2013.

Which brings us to the present. For the first 100+ years, our nation kept its debt below $3 billion, hitting the $3 billion mark in 1915. Five years later, $25 billion. 50 years later, $370 billion. A hundred years after 1915, $18 trillion. At the time of writing this article, $27,791,515,617,492.00. It rises $1 million dollars every 22 seconds. As it grows, it grows faster. our debt to GDP ratio is 146.19%. Our GDP, the money we make as a nation annually, is over $21 trillion dollars. The money we owe is over $27 trillion. And climbing. Debt per taxpayer is $222,191. Our debt to foreign countries is over $7 trillion dollars. As a nation we have borrowed money from 3rd world countries. We owe 35 different nations. We owe Japan over $1 trillion dollars. We owe China over $1 trillion dollars.

To view our debt in real time, go to usdebtclock.org. Grab a cup of beverage and browse around. You can go to each individual state and see how they are doing. There is also a tab to go back or go foward in time.