Blessed are the young, for they shall inherit the national debt — Herbert Hoover
If lamentations over a molehill of a national debt happened back in Hoover’s day, imagine the apoplectic fit he would have had over today’s $16.4 trillion Mount Everest sum.
For most of us the idea of millions of dollars is a bit difficult to imagine. Billions is all but impossible. Trillions sounds like play money, or perhaps particles only seen in quantum physics. Alas, the U.S. national debt crossed into the thirteen-figure realm in 1982, and except for the second term of Bill Clinton, has mushroomed ever since.
It is a statistical fact that the national debt soared during the first term of President Barack Obama, increasing from $10.6 trillion — a hefty sum in its own right — to $16.4 trillion at the time of his second inauguration. The $5.8 trillion difference represents a 54.7% increase from when he initially took office.
To put the current national debt figure in perspective, let’s look at a few facts:
- The sum total of debt incurred under Obama’s watch exceeds the combined tallies of all previous presidents up until George W. Bush.
- The increase during Obama’s first term equates to $50,521 per household.
- The national debt was $5.7 trillion the day George W. Bush was inaugurated. Under Obama, it increased by greater than that entire figure in just the past four years
- Interest paid on the debt is estimated to be roughly $250 billion for 2013.
- The interest line item in the federal budget is the fifth largest budgetary expenditure and nearly twice what will be spent on education.
To understand how we got where we are, we first need to understand exactly what the national debt is.
National Debt: What Does it Represent?
Although an oversimplified representation, consider the national debt the metaphorical equivalent of budgets gone wild. During the 19th and early 20th centuries, deficits typically occurred only during wartime or economic downturns. As such, the national debt back then was very small, even after adjusting for inflation.
The confluence of World War I, the Great Depression and World War II (all within a span of 30 years), however, caused several spikes upward, particularly during the second World War. Deficits increased to as high as an inflation-adjusted $728 billion in 1943, and stayed deeply in the red until 1947.
Budgets are typically balanced in one of three ways: 1) increased income, 2) decreased expenses, or 3) a combination of the two. Since the U.S. has balanced its budget just 12 times over the past 72 years, it has had to borrow to meet its obligations during the other 60 years. Given that the government has an unlimited ability to borrow, it has had little incentive to make any serious fiscal policy reform. As a result, nothing significant has been done, and the debts continued to accumulate — especially under President Obama.
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