National Debt Graph (2007 Budget data)
|In 1981 the gross national debt, as a percent of
the nation's annual income, reached its lowest point since 1931,
32.5%. It could have been paid off then more easily than at any
time in the previous 50 years. Despite his professed abhorrence for debt, Reagan instituted unprecedented peacetime
deficit spending. (The current Administration's Office of
Management and Budget (OMB), in its 2006 Budget, provides
a remarkably candid explanation of what
happened to the deficit during the Reagan and Bush I
As the graph below shows, Bush II repeated Reagan's performance and turned the debt upward again. Bush II's own OMB predicted a 47-year high in 2006.
Really bigger, or just inflation?
How could Reagan (as quoted here) misstate the lowest national debt for the highest? Because he didn't compare it to the rest of the economy, which was growing much faster.
This graph compares the size of the Gross National Debt (the blue line, in trillions of dollars) with a typical piece of the U.S. economy -- expenditures on furniture, to pick an example (the red line, in billions of dollars per year - the right axis). The vertical line marks the year in which Reagan spoke (1979). The figures are in "nominal" terms (as-expended dollars, not adjusted for inflation).
As the graph shows, furniture expenditures grew more from 1979 to 1992 than in the previous 40 years. Was there a furniture crisis, even worse than the claimed debt crisis? Of course not. Inflation was high, which makes everything look like it's growing at a faster pace than it really is. Almost all national expenditures grow because of (1) inflation, (2) population and (3) increasing prosperity. Furniture sales were just growing at a normal rate to keep up with the country, while the debt was actually growing more slowly than the rest of the economy. Thus, the debt was actually shrinking relative to the national income. The most popular national debt web sites still perpetuate confusion between inflation and the real size of the economy.
The debt grew rapidly during the worst of the great depression, and rapidly during World War II, but its growth during peace-time prosperity starting in 1982 was without precedent.
|Was it Reagan or the Democratic
Some say the debt’s U-turn when Reagan arrived had nothing to do with his tax cuts, but was caused by Congressional Democrats. Not true. Had Reagan’s proposed budgets come true, the increased debt would have increased 85% as much as it actually did (in nominal dollars), but even this is deceptive. It was not Congress that caused that last 15%; it was the fact that the economy performed less well than predicted in the Reagan budgets. This caused more government spending on unemployment insurance etc. and less tax revenue. In fact a study by the House found that Reagan asked for $29.4 billion more in spending than Congress passed.
|Whose National-Debt Numbers?
The data plotted here were taken directly from the White House web site and plotted without modification. For details, see (Source).
|National Debt by President
The national debt peaked at 120% of GDP in 1946 due to the war effort, but Roosevelt, Truman, Ike, Kennedy, LBJ, Nixon, and Carter all did their part to bring the national debt back to pre-war levels. By the beginning of 1981, the national debt had fallen to 32.5% of GDP. Then, Reagan took office and the national debt took off. It rose non-stop for 12 years to 66.3% at the end of Bush's term, erasing 25 years of progress in paying down the national debt. Percent contributed by president.
|The Problem||The National Debt is a Political Problem|
|High inflation allowed
to misstate an inflated-dollar debt as a real growth in debt. On
February 5, 1981, two weeks after taking office, in his "Address to
the Nation on the Economy," Reagan said:
From the White House: The Reagan-Bush Debt Explained
"The traditional pattern of running large deficits only in times of war or economic downturns was broken during much of the 1980s. In 1982 [Reagan's first budget year], partly in response to a recession, large tax cuts were enacted. However, these were accompanied by substantial increases in defense spending. Although reductions were made to nondefense spending, they were not sufficient to offset the impact on the deficit. As a result, deficits averaging $206 billion were incurred between 1983 and 1992. These unprecedented peacetime deficits increased debt held by the public from $789 billion in 1981 to $3.0 trillion (48.1% of GDP) in 1992." [emphasis added]
From "Historical Tables, Budget of the U.S. Government, Fiscal Year 2006." Downloaded from www.whitehouse.gov/omb/budget/fy2006/pdf/hist.pdf. Page 5.
|Crude Oil Prices|
The estimated population of the United States is
so each citizen's share of this debt is $28,917.69.
The National Debt has continued to increase an
$1.50 billion per day since September 29, 2006!
Concerned? Then tell Congress and the White House!
In the 4 years 1997-2001 total federal debt
increased $438 billion,
a period when politicians bragged about a $557 billion surplus.
That's a $1 Trillion creditability gap.
(Some might suggest Enron and others learned reporting gimmickry from government practices)
An additional $2.3 trillion of debt was added in 2002-2006
This report is about the increased dependence of federal government debt, impacting families and the young, presented in an easy-to-understand format with 9 pictures. This page, with 2 graphics, is a summary of many revealing pictures included in the Full Federal Government Debt Report (link bottom of page).
Our younger generation is being loaded with a historic debt burden, caused by run-away consumptive social spending in the past 30 years - with zero plan by the generation that created it taking the responsibility to pay it off (past claims that total debt was being paid-down are bogus, since total debt increased every year).
If we divide fiscal year 2006 ending debt of $8.507 trillion by the population of 299 million we have debt per person.
At the left is a chart showing the rapid build-up of
federal debt per man, woman and child to $28,423.
This means a family of four (4) shares $113,692 in federal debt responsibility - - including those still in diapers. And, that's not all they owe.
Our nation's founders were against debt. At the writing of the Constitution they were concerned about debt incurred to finance the Revolutionary War, and it was their intention to promptly pay it off. Alexander Hamilton (federalist paper #7) called for the "extinguishment of all debt." Thomas Jefferson later wrote, "I place economy among the first and most important of republican virtues, and public debt as the greatest of dangers to be feared."
If today's debt ratio to national income were the same as in the early 1970s (40%), today's debt would be a whopping $3.6 trillion ($12,000 per person) less than it is.
Is the debt going down? Nope!! In fiscal year 2006 (ending 9/30/06) federal debt rose to $8.5 trillion - $574 billion more than the prior year, which is a one-year increase of $1,681 per man, woman and child - or $6,724 per family of 4 - - another in a long string of new records.
During the period since the Sept. 11, 2001 terrorist attack, federal government debt increased $2.7 trillion.Some might say, "But isn't more debt OK to fight the 'war on terror'?" My response: did they reduce non-defense spending to fund our protection, since the major reason our founders formed a federal government was for national security? Answer: Nope!! They increased non-defense spending, too. How many senators and congressmen can you name who proposed serious legislation to significantly reduce non-defense spending in that period?
Question: How could officials claim budget
surpluses in the late 1990s, and that they paid down debt, when
total debt increased to a new record high each and every year?
Answer: the general federal government did not have a surplus in any year in the past 20.For example > During the 4-year period FY 1998-2001 politicians claimed a $557 billion surplus, yet total debt increased $438 billion in that period - - meaning the actual situation was nearly $1 trillion over-stated, which makes such 'hide-the-debt' scandals like Enron look like child's play. The Deficit-Trust Report shows the general government spent more than its general revenues every year, and covered up over-spending deficit by siphoning-off all $ 3.3 trillion cash surpluses incoming to trust funds, including spending every penny remaining in the social security trust fund on non-pension items - - creating even more non-marketable debt IOUs to 'paper-over' their actions - - while claiming they want to 'save social security'. (If a private firm did that to its employee pension fund its officers would go to jail - a law in every state).
TO WHOM DO WE OWE FEDERAL GOVERNMENT DEBT?
Some like to 'hope' we owe it all to ourselves. This chart shows otherwise.
How about a lot owed to foreign interests? Is $2.2 Trillion a lot? Absolutely !!
Of the $8.2 Trillion in total Federal government debt outstanding at the end of CY 2005, approximately $4.7 Trillion was owed to the public (foreign and domestic) in the form of treasury bonds and T-bills. Of that $4.7 trillion, nearly half, $2.2 Trillion, was owed to foreign interests.
The left chart shows foreign parties control 46% ($2.2 trillion) of $4.7 trillion of outstanding Treasury bond and T-Bill dominated debt - at the end of 2005.
This means each man, woman and child owes $7,508 in federal debt to foreign interests. A family of 4 owes $30,034 in this regard - - 31% of the total is owed to Japanese interests.
Note the rapidly rising trend since 1992, as the share of foreign holdings more than tripled.
Who was the idiot that said about debt, "We owe it to ourselves, so its no big deal if debt goes up." This chart proves Americans owe a huge amount to foreign interests - - and that's a very serious 'deal."
This spend-spend-spend with debt-debt-debt mentality of the Federal Government has in more recent years spilled over into the private sector, as debt ratios of the household, business and the financial sectors have soared to historic record highs, which is graphically demonstrated in another chapter of this series called 'America's Total Debt Report' (link below). We have become a nation of 'debt-junkies,' living beyond our means more than ever before. And, like a drug junkie, we require larger and larger doses. Such trends cannot be sustained forever, but where is clear action to reverse?
Foreign interests now own more and more of America - - According to the above chart, they own about 45% of federal government treasury bonds. Foreigners own about "$9 trillion of U.S. financial assets, including 13% of all stocks, 13% of agencies, and 27% of corporate bonds", according to Gillespie Research/Federal Reserve. The major provider of money for home mortgages is Fannie Mae - - guess where they get that money > > answer: they borrow about a third from outside the U.S., according to Bloomberg Sept. 2002. Additionally, foreign interests own real estate and factories.
We should not be mad at foreign interests. We are the ones consuming beyond our own production, with nil savings, creating unprecedented debts in all sectors and trade deficits, PLUS excessive federal spending.
Question 2: Where's the government plan to pay-off the total federal debt, including the $3.3 Trillion of IOUs they owe the trust funds including the $1.5 trillion owed the social security trust fund they constantly claim they want to save? Answer: No such plan exists, other than continuing to siphon-off surpluses from trust funds while 'covering' that with even more non-marketable IOUs. This does not reduce total debt - - or save anything.
Question 3: Did you know that after World War II and the Korean War America's federal government debt ratio to GDP was declining rapidly, pointing toward zero debt - and, at the same time, median family incomes adjusted for inflation were rising rapidly? That's a fact !!! Unfortunately, rapidly rising social spending ratios in the 1960s wiped out that trend. See the facts in tell-all data graphics in the full report link below.
you have just viewed the starter page of our Federal Government Debt Report
The two color graphics above are examples of others you will find in the full Debt Report, on the next page. You are invited to review and gain knowledge.
Link to the full FEDERAL GOVERNMENT DEBT REPORT with pictures - there are 9 color graphics that tell the whole story - - so, give the next page time to load those neat pictures. After you scan this full report for the complete picture of debt and how it happened you can return to your favorite sections via the following Quick Links. KNOWLEDGE IS POWER - - IF YOU SEEK IT, based on hard data.
Even if you don't feel personally responsible for your share of this debt obligation, the immediate impact on you of this much debt is interest payments from your taxes. As long as there is debt there will be interest payments! Even if the Deficit is minus (we are then reducing the debt and running a surplus), there will be interest payments on the remaining debt. This is money that is not going to social services, education, defense, etc.
The graph on the left (click to enlarge into a separate browser window) shows the end of the month level of the US Federal National Debt since the start of 1993. It continues its inexorable climb despite assertions that there were surpluses. If there was a surplus, would the debt not be reduced?
So, there really hasn't been a budget
Has it gone down?
Really, there haven't been any surpluses!
|This Fiscal Year to Date"Estimated"||FY 2004||FY 2003|
|FFY* Interest Payments on the US National Debt||$185,494,819,746.15||$321,566,323,971.29||$318,148,529,151.51|
|FFY* Interest Payments per US Citizen||$616.04||$1,067.94||$1,056.59|
|FFY* Interest Payments for Wage Earner(s) in family of 2||$1,232.08||$2,135.88||$2,113.18|
|FFY* Interest Payments for Wage Earner(s) in family of 3||$1,848.12||$3,203.83||$3,169.78|
|FFY* Interest Payments for Wage Earner(s) in family of 4||$2,464.16||$4,271.77||$4,226.37|
|FFY* Interest Payments for Wage Earner(s) in family of 5||$3,080.20||$5,339.71||$5,282.96|
|FFY* Interest Payments for Wage Earner(s) in family of 6||$3,696.24||$6,339.55||$6,407.65|
So where does this leave us? Owing a lot of money which the lenders believe will be repayed to them or presumably they would not have lent it in the first place.
Since the Government's Financial Net Worth (negative block) is its Financial assets (little blip) minus its Financial obligations (dark red bar), the Net Worth (hanging block) of the US Government is very much in the negative and has only modestly improved. The fourth bar is the Gross Domestic Product. The fifth bar is the trade balance. We've put these five commonly discussed annual figures on a single chart to illustrate their relative magnitude. Click on the image on the right for a full size graph showing the big monatary picture for the last six years. Including the US Gross Domestic Product on the Graph serves two purposes: to show that in an era of rising prosperity, little was done to improve the US debt situation and secondly to show the debt in relation to the country's economic income.
Here are the government sources of our information:
The US Treasury Bureau of Public Debt is used to calibrate the existing debt each day. Figures from the US Treasury, provide the interest dollars used in the above calculations. And of course we obtain our population figures from the US Census Bureau'sestimates The government's financial position comes from the US Treasury's FMS System. The economic GDP data is from the Bureau of Economic Analysis at the Department of Commerce.
You can get more information at J. C. Adamson's Muser web page.