The election is almost here, and who the hell knows who’s going to win? But I think the loser will be our national debt. Neither Trump nor Clinton seem like they will do what it takes to lower our national debt.
Should we worry? I wasn’t sure, so I did some internet sleuthing to see if I could understand our national debt better.
According to http://www.usdebtclock.org/, the national debt is currently approaching 20 trillion dollars.
Are you bored yet? Yes? Okay, here’s a fun fact about the national debt. If you lay 20 trillion one-dollar bills end-to-end, they will wrap about three-quarters of the way around Donald Trump’s head. And they will nearly cover his mouth.
Who do you think our government owes the most money to? Did you answer China? If so, you get a big “nnnnnngggggg!!!”. You may have gotten that impression from listening to Donald Trump, but no, China is not our biggest creditor. But they are our biggest foreign creditor. We owe about 1.2 trillion dollars to that nation. A close second is Japan, who we owe 1.1 trillion dollars. Our total foreign debt is about 6.2 trillion dollars.
Actually the country our government owes the most to is the good ol’ USA. Our government borrows money from trusts owned by our government. This is called intergovernmental debt, and much of this borrowing is from the Social Security trust fund. We currently owe more than 6 trillion dollars to ourselves, with 3 trillion of that debt being owed to Social Security.
Aha! I caught you sleeping. So here’s another fun fact to keep you awake. The fiscal year 1835-1836 was the only year the U.S. Government has not been in debt. Which is the same year Bernie Sanders was born.
The best way to evaluate U.S. debt is as a percentage of the Gross Domestic Product. Currently our public debt (which does not include intergovernmental debt) is at 77% of our GDP. But our total debt is about 106% of the GDP. Let’s check out Wiki, and look at total debt historically. Wait! Wake up!
Here’s a joke to get your eyes open. No? No more of my jokes? Y-you’d rather just slog through the dry facts? Well, shit. Okay.
In 1910, our ratio of total debt to GDP was just 8%. But by 1920, thanks to World War I, our percent of total debt to GDP had grown to 29%. But hey, war is hell and hell is expensive.
By 1930 it shrank to 17%. This was at the start of the Great Depression, which some say was triggered by tight monetary policies. But in 1940, thanks to Roosevelt’s New Deal, it had risen to about 48%. And in 1950, after World War II, the expenses of global warfare had caused the debt ratio to skyrocket to 92%.
But by 1980 it had shrank to 32%, thanks to three decades of high progressive income tax rates. However, those income tax rates were drastically reduced under President Reagan’s trickle-down economic plan of the 1980s, which cut the top tax rate from 70% to 28%. By the year 2000, our shrinking ratio of total debt to GDP had reversed course and risen to 56%.
In 2008, after Bush cut our taxes and started two wars, the ratio was up to 68%. Then the housing market collapsed and the Great Recession struck. The government moved in to bail out Wall Street and just two years later, in 2010, the percentage was towering at 92%, and rising.
Today it is at 106% of our GDP, thanks to whatever the hell happened this year. It had actually declined from 103% to 101% from 2014 to 2015. This year’s jump illustrates just how difficult it is to get our national debt under control.
I see no better way to control and reduce the national debt ratio other than to reintroduce the high progressive income tax rates of post-World War II. We can’t seem to cut our way out of this. Yet no major Presidential candidate other than Bernie Sanders has had the political balls to propose such a thing. And Bernie lost.
The Government Accountability Office (GAO) reported in 2009, that the United States is on a “fiscally unsustainable” path because of projected future increases in Medicare and Social Security spending. Their trust funds will run out of money, and the government won’t be able to pay back what it owes these funds.
Old folks often vote for politicians who promise lower taxes. Perhaps when they get hit with high medical bills and lower Social Security benefits, they’ll change their tune.
Wait a second, I’m one of those old folks.
Expect to see me right there at the forefront of the new, old-fogie revolution. I’ll be pushing politicians to raise taxes on the rich, and get our national debt under control.
If, by that time, I’m not dead.
Okay I’m finished now. WAKE UP!!