Time to Get Serious about the United States National Debt
The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.
By Stephen R. Rolandi
May 18, 2019
Our third president, Thomas Jefferson, was very much what one would call an anti-debt president (although, somewhat ironically, when he died in 1826 he personally owed approximately $100,000, which his heirs subsequently retired). Jefferson once wrote, “That the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale.”
Jefferson’s words are very relevant almost two hundred years later. Amidst news items of the Mueller report, possible impeachment proceedings of President Trump, ongoing Congressional investigations and the debate over tariffs and immigration policy, there seems to be little attention paid by lawmakers in Washington, D.C. to the problem of the growing annual Federal budget deficits and the nation’s national debt.
However, some good government and public policy organizations, such as the Committee for a Responsible Federal Budget, “Have been issuing fiscal analyses and warnings about our growing budget deficits and debts in recent months.”
In this article, I will attempt to describe what the national debt is, and why it has become even more serious in recent years (and in a future article, I will lay out what I believe may be workable proposals).
The United States government has continuously had, since its establishment in 1789, a fluctuating public debt. In George Washington’s first term, it was approximately
$71 million. This occurred under the new Federal government, with the Revenue Act of 1790 under Alexander Hamilton, to issue Federal bonds to collect (and ultimately pay down) the debt of the colonies incurred during the Revolutionary War into one guaranteed federal obligation.
The amount of debt has fluctuated at various times in our nation’s history. For nearly two years in Andrew Jackson’s administration (1835-1836), the national debt was pared down to zero. Consequently, an economic recession ensured, and the United States started incurring debt again. Public debt increased significantly during wartime periods, and rose sharply during the1980s and again during the first decade of the 21st century.
There are two basic components of total national debt:
- Debt held by the public: These include Treasury securities held by investors, corporations, the Federal Reserve System and foreign, state and local governments.
- Debt held by government accounts or intra-governmental debt: For example, non-marketable Treasury securities such as the Social Security Trust Fund.
Debt held by government accounts represent cumulative surpluses, including interest earnings, of various government programs that have been invested in United States Treasury securities.
Some things are worth keeping in mind here. For one, the United States government is not required to have balanced budgets and keep debt within certain parameters as do state and local governments, which are mandated by their constitutions and statutes to have recurring balanced budgets.
The other important thing in understanding the nation’s total public debt is to make comparisons between debt and a nation’s Gross Domestic Product (GDP) so that one calculates a mathematical comparison between total debt and GDP.
Currently (as of May 17, 2019), the United States total GDP, under the current Trump Administration, stood at nearly $21.1 trillion, compared to a total national debt of nearly $22.3 trillion. This works out to a Debt to GDP ratio of almost 105.5 percent. In contrast to the final full year of the Obama administration in 2016, the respective numbers were $19.6 trillion of debt and $18.6 trillion of GDP, for a debt to GDP ratio of 105.1 percent. Under current projections, we may expect the comparable debt and GDP to rise to approximately $29.2 trillion and $24.4 trillion (debt to GDP ratio would be almost 120 percent), respectively by 2023, if President Trump is re-elected next year and current fiscal policies remain in place (refer to the United States National Debt Clock).
One can attribute this steep rise in just over two years to the Trump administration annual deficit budgets, now running at over $ 1 trillion annually, as well as the cumulative effects of the 2018 tax cut legislation passed by Congress.
In its May 13, 2019 report, The Committee for a Responsible Federal Budget referred to a May 2019 analysis compiled by the Congressional Budget Office (CBO) that at current projections, the national debt will continue to grow faster than the United States economy for the foreseeable future unless serious measures are taken on a bi-partisan basis, and soon.
In my next article, I will examine possible solutions to this problem, as well as what presidential candidates are saying (or not saying) on the campaign trail.
Author: Stephen R. Rolandi retired in 2015 after serving with the State and City of New York. He holds BA and MPA degrees from New York University, and studied law at Brooklyn Law School. He is an adjunct professor of public administration at John Jay College of Criminal Justice (CUNY) and Pace University. He is currently President of ASPA’s New York Metropolitan Chapter and served four terms on ASPA’s National Council. You can reach him at: [email protected] or [email protected].
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Time to Get Serious about the United States National Debt
The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.
By Stephen R. Rolandi
May 18, 2019
Our third president, Thomas Jefferson, was very much what one would call an anti-debt president (although, somewhat ironically, when he died in 1826 he personally owed approximately $100,000, which his heirs subsequently retired). Jefferson once wrote, “That the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale.”
Jefferson’s words are very relevant almost two hundred years later. Amidst news items of the Mueller report, possible impeachment proceedings of President Trump, ongoing Congressional investigations and the debate over tariffs and immigration policy, there seems to be little attention paid by lawmakers in Washington, D.C. to the problem of the growing annual Federal budget deficits and the nation’s national debt.
However, some good government and public policy organizations, such as the Committee for a Responsible Federal Budget, “Have been issuing fiscal analyses and warnings about our growing budget deficits and debts in recent months.”
In this article, I will attempt to describe what the national debt is, and why it has become even more serious in recent years (and in a future article, I will lay out what I believe may be workable proposals).
The United States government has continuously had, since its establishment in 1789, a fluctuating public debt. In George Washington’s first term, it was approximately
$71 million. This occurred under the new Federal government, with the Revenue Act of 1790 under Alexander Hamilton, to issue Federal bonds to collect (and ultimately pay down) the debt of the colonies incurred during the Revolutionary War into one guaranteed federal obligation.
The amount of debt has fluctuated at various times in our nation’s history. For nearly two years in Andrew Jackson’s administration (1835-1836), the national debt was pared down to zero. Consequently, an economic recession ensured, and the United States started incurring debt again. Public debt increased significantly during wartime periods, and rose sharply during the1980s and again during the first decade of the 21st century.
There are two basic components of total national debt:
Debt held by government accounts represent cumulative surpluses, including interest earnings, of various government programs that have been invested in United States Treasury securities.
Some things are worth keeping in mind here. For one, the United States government is not required to have balanced budgets and keep debt within certain parameters as do state and local governments, which are mandated by their constitutions and statutes to have recurring balanced budgets.
The other important thing in understanding the nation’s total public debt is to make comparisons between debt and a nation’s Gross Domestic Product (GDP) so that one calculates a mathematical comparison between total debt and GDP.
Currently (as of May 17, 2019), the United States total GDP, under the current Trump Administration, stood at nearly $21.1 trillion, compared to a total national debt of nearly $22.3 trillion. This works out to a Debt to GDP ratio of almost 105.5 percent. In contrast to the final full year of the Obama administration in 2016, the respective numbers were $19.6 trillion of debt and $18.6 trillion of GDP, for a debt to GDP ratio of 105.1 percent. Under current projections, we may expect the comparable debt and GDP to rise to approximately $29.2 trillion and $24.4 trillion (debt to GDP ratio would be almost 120 percent), respectively by 2023, if President Trump is re-elected next year and current fiscal policies remain in place (refer to the United States National Debt Clock).
One can attribute this steep rise in just over two years to the Trump administration annual deficit budgets, now running at over $ 1 trillion annually, as well as the cumulative effects of the 2018 tax cut legislation passed by Congress.
In its May 13, 2019 report, The Committee for a Responsible Federal Budget referred to a May 2019 analysis compiled by the Congressional Budget Office (CBO) that at current projections, the national debt will continue to grow faster than the United States economy for the foreseeable future unless serious measures are taken on a bi-partisan basis, and soon.
In my next article, I will examine possible solutions to this problem, as well as what presidential candidates are saying (or not saying) on the campaign trail.
Author: Stephen R. Rolandi retired in 2015 after serving with the State and City of New York. He holds BA and MPA degrees from New York University, and studied law at Brooklyn Law School. He is an adjunct professor of public administration at John Jay College of Criminal Justice (CUNY) and Pace University. He is currently President of ASPA’s New York Metropolitan Chapter and served four terms on ASPA’s National Council. You can reach him at: [email protected] or [email protected].
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