What Is the National Debt?

U.S. National Debt Anton Bulík

What is the National Debt?

“The National Debt is the total amount of borrowing accumulated by the government that is still outstanding. It is the total amount that the government owes to individuals and institutions. Each year the National Debt will rise by the amount of the PSNCR, and fall by the amount of debt that is paid off. “ – that’s what dictionary gave me, but simply said: “It is all the money owed by the government, because of borrowing them in the past.”

On January 15th 2004, the Outstanding Public Debt jumped $13 billion to

$7,001,852,607,623.35. It took National Debt over six years to rise from $5 trillion to

$6 trillion, but go from $6 trillion to $7 trillion, that estimated just 2 years.

The gross national debt is over $7,5 trillion and it rose by $700 billion in the 2004 year. The national debt is comprised of money borrowed from and owed to various government trust funds, including Social Security, and the public, including individuals, corporations, state, local and foreign governments, and the Federal

Reserve, typically in the form of bonds or other types of securities.

Some people doesn’t know what’s the difference between Debt and Deficit. It’s quite simple, debt is the total amount of money owed by the government, while the deficit is the yearly amount by which the government outspends itself.

But how to measure it? The National Debt is the total amount of money owed by the government; the federal budget deficit is the yearly amount by which spending exceeds revenue. Add up all the deficits (and subtract those few budget surpluses we've had) for the past 200+ years and you'll get the current National Debt.

Anyways, here some other look at the word “debt”:

2 Debt means for me a sound way to finance good investments. Good investments induce or foster economic growth – for individuals, for businesses, for local governments, and for the federal government. In other words, good investments make us wealthier, and debt is a sound way to finance good investments; therefore, debt -- aka, using "other people's money" -- can make us wealthier.

Yeah, I know, there is a little problem. That you must make more money on investments to pay off your debt, what U.S. government somehow doesn’t.

How did U.S. get there?

Each year since 1969, Congress has spent more money than its income. The

Treasury Department has to borrow money to meet Congress's appropriations, and the total amount borrowed will grow. Even when government officials claim to have a surplus, they still spend more than they get in. We pay interest on that huge debt.

About 22% is owed to the foreign countries. Just by listening to what the lenders are telling:

"The USA has become the wealthiest nation in the history of civilization. You are obviously doing something right. We'd love for you to do even better, and because of your excellent track record of growth so far, we'd be happy to help you continue to grow. In other words, we'll lend you our money at one of the lowest interest rates we demand of any entity on the planet. Thank you for giving us a safe, secure way to invest our money. Keep up the good work, America!"

What is government doing pay it off?

U.S. Government collect more money by offering citizens to buy federal bonds.

This is the same thing as loaning money to the federal government. When someone

3 buys a federal bond, what they are buying is a promise from the federal government to return to them the money that they paid for the bond plus some interest. When a person borrows money, it is referred to it as "borrowing money." When the government borrows money, it is referred to "issuing bonds.”

For this reason, some people refer to the bonds in the Social Security Trust Fund as

"worthless IOU's." This characterization is inaccurate. The bonds in the Trust Fund are as real as any U.S. Savings Bond that you might happen to own. The Social

Security program loaned this money to the federal government and has a legal right to receive it back with interest.

When there is a surplus in the budget, Government "buy back" some of the debt. In fact there are already laws and regulations in place that call for the automatic buy back of some of the debt when a surplus occurs

What would I do?

The very weird thing about paying off National Debt is, that “citizens” have already spent the over 7 trillion dollars which the Federal Government owes and therefore “citizens” must repay it. This is nonsense for me at this point. No taxpayer alive now ever voted or otherwise agreed to allow the government to borrow money on their behalf and agreed to underwrite the resultant ruinous interest obligation. No citizen spent that money. The government spent it, to keep promises it had no business making in the first place.

I believe that there is no need of worry about the debt. What we need is to keep growing the economy. Then the debt will take care of itself. Everybody kows that worthy projects can be safely financed with a measure of borrowing -- and conversely that unworthy projects should be rejected outright, i.e., should be financed neither

4 through borrowing nor through taxation nor through equity. They talk as if "success" means "avoidance of borrowing and debt," but never explain why long-time borrowers Donald Trump, Wal Mart, General Electric, or Uncle Sam have become not abject, debt-ridden failures, but phenomenal success stories instead. By focusing on the money, instead of what we get for the money, they have steered the national debate onto the counterproductive sidetrack of deficits and debt -- away from the important debate about the best ways to achieve growing incomes for all.

Deficits and debt are not the monsters that vote-seeking politicians and donation- seeking special interest groups are portraying it to be. We shouldn't be worrying about deficits and debt; we should instead be worrying about how to achieve non- inflationary growth in national income -- such that national income grows at least as fast as the debt grows. The private sector provides most of the wealth and growth -- however, government does some investing, too. It invests in different things (vs. the private sector), but it invests nonetheless.

Debt is the wrong enemy. Americans should welcome the growth-enhancing lower tax rates enabled by prudent borrowing. Unfortunately, growth -- the forgotten friend

-- never seems to come up in the debate. Let's change that. Let's get the national debate off the deficit/debt sidetrack, and onto the right track: economic growth.

"With public sentiment, nothing can fail. Without it, nothing can succeed."

--Abraham Lincoln

Some other facts

5 The National Debt on January 1st 1791 was just $75 million dollars. Today, it rises by that amount every 5 hours or so.

Federal Government National Debt is $7,538,272,550,968.62

The estimated population of the United States is 295,225,801 so each citizen's share of this debt is $25,533.92

The National Debt has continued to increase an average of

$1.77 billion per day since September 30, 2004.

History Table:

07/01/1903 $2,202,464,781.89 07/01/1913 $2,916,204,913.66 06/30/1923 $22,349,707,365.36 06/30/1933 $22,538,672,560.15 06/30/1943 $136,696,090,329.90 06/30/1953 $266,071,061,638.57 12/31/1963 $309,346,845,059.17 12/31/1973 $469,898,039,554.70 12/31/1983 $1,410,702,000,000.00 09/30/1993 $4,411,488,883,139.38 09/30/2003 $6,783,231,062,743.62 01/15/2004 $7,001,852,607,623.35 01/04/2005 $7,538,272,550,968.62

Resources used:

Internet Sources:

1. http://zfacts.com/p/461.html

2. http://www.toptips.com/debt_history.htm

6 3. http://www.toptips.com/debtclock.html

4. http://www.publicdebt.treas.gov/opd/opdint.htm

5. http://www.whatreallyhappened.com/ndebt.html

6. http://web2.airmail.net/scsr/

7. http://www.brillig.com/debt_clock/faq.html

8. http://www.justfacts.com/socialsecurity.htm