Every family knows that you can’t spend more than what you earn. If you do, you are looking for trouble sooner or later. In the big scheme of things, every President should know that a country can’t spend more than what it collects in taxes. If he does over spend, the country is heading for trouble. This is the case with the astronomic U.S. National Public Debt.
Before I continue writing about the U.S. national debt, let’s clarify the term. The U.S. National Debt is the amount of money that the U.S. Government owes any number of creditors at any given time. A large part of the debt can be attributed to money borrowed by the government in times of a federal deficit.
It is often called the “public debt” not because the public is responsible for the occurrence of debt, but because the public is responsible for repaying it.
As President George W. Bush prepares to leave the White House next January, he leaves behind a National Debt that has soared from less than $6 trillion when he took office, to more than $10 trillion. This staggering bill will fall on future generations to pay. It’s commonly called “passing the buck”.
The growth of the debt has invited criticism of Congress and the Bush Administration. Critics have claimed that politicians have mortgaged the future for the sake of leveraging the political agenda of the present.
During the month of October 2008, the National Debt increased $500 billion. Never before in U.S. history has the national debt increased as much and as rapidly as it has over the past month. Since September 30, the day the national debt hit the $10-trillion mark for the first time, the government has run up over $500 billion in new debt.
That’s more than the federal deficit for the entire 2008 fiscal year, which ended September 30. And it’s the most rapid increase in the national debt ever: over half a trillion dollars in less than a month—23 days to be exact.
The government’s latest calculation of the national debt stands at $10,530,893,033,778.21—that’s $10.5 trillion for short. It took less than four months for it to rocket to that level from $9.5 trillion on July 21.
On the day President Bush was sworn in, the debt stood at $5.7 trillion. Less than eight years later, it’s within days of having swelled $5 trillion dollars on his watch—an embarrassing milestone for a president who considers himself a conservative and an advocate of fiscal discipline.
Why is the national debt soaring at historic levels? Above all else, it’s the federal government’s response to the Wall Street financial crisis. The government has announced it will borrow a record $550 billion in the current quarter as it scrambles to fund the huge rescue programs being put in place to deal with the worst financial crisis in seven decades.
The Treasury Department said Monday, Nov. 3rd, it plans to borrow more than a half-trillion dollars in the current October-December quarter and another $368 billion in the first three months of next year. Major Wall Street bond traders estimate the government’s borrowing needs for the whole year will total an unprecedented $1.4 trillion.
The next president that is being elected today, will have to deal with the problem of how to pay the interest on the expanding debt. If past practice holds, it’s a good bet the government will just borrow the money.
The size of the government’s borrowing needs and the projected deficit underscore the dramatic challenges that will be faced by the next president. It’s a huge mass of snow rolling down the hill, getting bigger and bigger as it rolls down to drown us all.