A Brief History of the National Debt

From Mole Hills to Mountains

By Tyler Grimm


with sidebars by Burton Folsom

The U.S. Treasury Department updates our national debt on a daily basis. The current debt—to the penny—is $13,203,473,753,967.10 (that's $13 trillion). With our country on the hook for such an incomprehensible sum, it's worth asking: How the heck did we get here?

WORDS OF WISDOM:

Andrew Jackson once said, when speaking of the large budget surplus, "It appears to me that the most safe, just, and federal disposition which could be made of the surplus revenue, would be its apportionment among the several states according to their ratio of representation."

Is our current level of debt a result of under-taxing? Over-spending?

Was it the wars in Iraq and Afghanistan and security buildup after 9/11? The Bush tax cuts? The bailouts? Obama's "stimulus"?

Before we get to that, let's start with a quick look at the history of U.S. debt. (All figures below refer to debt per person, adjusted for inflation to be comparable to the worth of a dollar today.)

For the Founding Fathers, the nation's debt obligations were a grave matter. In George Washington's farewell address, he was thankful the United States secured financing for the Revolutionary War but warned against excessive debt. He admonished the country's liabilities should be paid down quickly. "Cherish public credit," Washington implored, "... avoiding likewise the accumulation of debt, not only by shunning occasions of expense, but by vigorous exertions in time of peace to discharge the debts which unavoidable wars have occasioned, not ungenerously throwing upon posterity the bur[d]en which we ourselves ought to bear."

For the first 50 years of our nation's existence, the federal debt was reasonably low—on average, less than $130 per person. In fact, Andrew Jackson paid off the national debt (which he called a "national curse") entirely in 1835— the only time this has occurred in our country's history. The national debt remained low, averaging less than $35 per person, until the Civil War.

FOUNDING FACTS:

The Founders faced great financial problems in establishing the American


nation. The war for independence lasted more than six years and was expensive to


wage. Because the patriots had almost no cash, General George Washington (and others) signed notes to borrow food, clothes, ammunition, and weapons. By


the time Washington was elected president, those debts totaled $40 million—and to that we had to add another $11 million we had borrowed from the French, and about $24 million in debts the states had


accumulated in defeating the British. Thus President Washington, with a nation of


about 4 million people, faced a large war debt of about $75 million when he became


president. And that doesn’t count startup costs for the new United States.

That War – the deadliest in our nation's history – and the Reconstruction era that followed were costly but not extremely burdensome; debt peaked at around $1,100 per person and, for the most part, declined until World War I, when debt made its way up to around $3,000 per person. Not great, but still manageable. Then came the New Deal and World War II.

Franklin Roosevelt's vast expansion of the federal government under the New Deal drove up the debt to $4,000 per person (the amount would have been much higher but was offset with punitive tax increases).

Nevertheless, things weren't really grim until World War II, which plunged our country deep into the red. In per person terms, debt rose to $22,000 – a staggering 526 percent increase over 10 years prior. Total debt was well over 100 percent the size of the economy.

New York Times columnist Paul Krugman and other deficit-spending champions often claim, "we did it during World War II so we can do it now." But you should be aware of two very important distinctions between national debt during World War II and now.

First, we did not have a choice:

The nation was fighting an existential war against fascist foes that sought world domination. Second, the government was able to use the fervor of patriotism to sell War Bonds (think of the iconic Rosie the Riveter posters). While they helped finance the war effort, the bonds were actually an awful investment that would not pass muster today.

As Harvard historian Niall Ferguson has explained, "War bonds were among the worst investments of the 20th century, and it was just unfortunate that nobody had explained to my grandmother what her real interest rate was. If they had, she might have realized that she was earning negative real returns on her patriotic investment."

Besides, it's not as if there's an appetite for Cash for Clunkers bonds.

In the 1950s, the Korean War took a small toll on our nation's finances, but the next debt milestone worth mentioning is the "Great Society." Launched in 1965, this was President Lyndon Johnson's attempt to build upon the Big Government foundation laid by the New Deal. The effort included vastly expanding America's safety net with a series of new social welfare initiatives: Medicare, Medicaid, and Head Start were just a few of the programs created.

Initially, these did not have a huge impact on the country's debt burden. In fact, real debt mostly declined for the decade after 1965 (which Ted Kennedy called "the breakout year" for modern liberalism). However, the limited debt impact was an illusion based on artificially rosy economic assumptions. According to economist Herbert Stein, the Great Society "reflected a misconception of the long-run budget situation, if not a total neglect of the long run." These programs have since become a tumor in U.S. fiscal policy – by 2014, Medicare and Medicaid will be larger components of the budget than defense spending.

WORDS OF WISDOM:

Henry Morgenthau, FDR’s Secretary of Treasury, once said “[we] have tried spending money. We are spending more than we have ever spent before and it does not work. I say after eight years of this Administration we have just as much unemployment as when we started... And an enormous debt to boot!”

The Vietnam War, while perceived to be very costly, was not that expensive in historical terms. At roughly $700 billion in today's dollars, it cost less in total than the price of Social Security this year alone. It was the Cold War military buildup that cost us big.

While Ronald Reagan was the most fiscally conservative president in modern history, he did not shy away from a serious ramp up in defense spending. He wanted to keep government small, but Reagan knew that stopping the spread of Communism was paramount. As you can see in the nearby chart, debt soared in the 1980s. The debt per person in 1981 was about $10,000. By the time the Berlin Wall fell, that figure doubled to $20,000.

The 1990s saw a modest increase in the national debt. Per person, debt increased less than 15 percent under Bill Clinton. Things would have been a lot worse, but our balance sheet was aided by the gridlock resulting from Bill Clinton having to work with a Republican congress.

Now, let's fast-forward to the year 2000, where things really start to get interesting.

By the new millennium's start, debt reached roughly $25,000 per person. This, however, didn't stop George W. Bush from going on a spending binge that would make shopaholics wince. He increased spending on income security programs by 44%; education by 63%; community development by 134%. Bush increased spending more than Bill Clinton in nearly every category of the budget. In just eight years, Bush managed to raise debt per person to over $38,000.

Believe it or not, there is an actual "limit" on our debt. The limit is more of a political tool than a real barometer of our debt. Nevertheless, it does provide some context for how bad our current situation is. Congress first established the debt ceiling at the onset of WWII in 1940; it was set at $49 billion (adjusted for inflation, that's equal to about $5,700 per person). It has since been raised 99 times and is now set at $14.3 trillion ($47,000 per person).

If you ask a liberal how our debt exploded in recent years, they will likely say Bush's expensive wars and tax cuts. The truth is that defense spending accounted for only 40 percent of all new spending under Bush.

 

Washington now hopes to cut the deficit in half by 2013.

But consider this: according to Congressional Budget Office (CBO) data, had Obama done nothing, the deficit would have declined by more than 75%. This is not fuzzy math coming from a right-wing think tank; that statistic is based on cold hard facts from the CBO's budget calculations.

Before a president proposes the annual budget, there is an established "baseline" – that is, what spending would have been had the previous budget trajectory continued. In March of 2009, the baseline (this included the "stimulus") projected that the deficit would decrease to $300 billion by 2013. In the same document, the CBO estimates that President Obama's proposed spending would mean that the deficit would be $672 billion that year.

In the year and a half since then, the situation has only gotten worse. The White House said in late July that, based on the latest spending assumptions, debt in 2013 would be $736 billion. Sure, that is still half of this year's $1.47 trillion deficit, but that's like applauding a smoker for cutting down from eight to four packs a day.

As of this writing, total debt stands at roughly $43,000 per person. To service this obligation, we are paying interest of about $188 billion (more than 10 times what Wal-Mart will make in profits this year). Unlike other areas of the budget, with interest payments we get absolutely nothing in return – the money simply goes to finance past overspending.

By 2020, debt per person is slated to reach more than $75,000 and interest payments will more than quadruple to $900 billion. That means we will be paying more in interest than the current size of Switzerland and Sweden's economies combined. And that's a best-case scenario – it assumes we continue to enjoy relatively low interest rates.

FOUNDING FACTS:

Not scared enough? Let’s break it down another way. In 2008, our national debt was 40 percent of GDP. Currently, it has risen to 62 percent of GDP and the Congressional Budget Office recently estimated that by 2020 it would be 90 percent of GDP.

But it gets much worse. Over the next 75 years, Medicare and Social Security are slated to spend $46 trillion more than they will take in. Former Treasury official Bruce Bartlett has estimated the total amount by which future spending is unfunded to be over $100 trillion. To put that in perspective, that's equivalent to taking this year's income from all Americans… nine times.

We are in the midst of a fiscal crisis that threatens to undo the financial fabric that makes America the land of plenty. We are doomed unless our elected officials can find the courage to make the politically unpopular spending cuts that are needed to put the country back on a sustainable path.

 



<< Return to the September 2010

Our Fourth Amendment, which protects our right to privacy, has never been in more danger. Journalist Lara Logan joined Glenn Beck on the radio program Thursday to explain how the digital world has given leaders — both in government and corporations — the ability to not only spy on Americans, but to track their patterns of behavior, too.

Lara explained why, even if you think you have nothing to hide, you should be very concerned. Because these digital "human terrain maps" could be used to manipulate you in any way those in control see fit.

"The purpose of your privacy is much more than just being out of public view," Lara said. "There is really nothing that's more central to our democracy than the right to privacy. I mean, all of the rights in the Constitution have a real purpose, and a real value, and if we allow people to take them away from us, we voluntarily are surrendering that. We are lambs to the slaughter.

"They're not just looking at what you have to hide. They're looking to manipulate you into doing what they want. These are control systems. That's what they are," Lara explained. "What they do with the information is they create a 'human terrain map' for every single person on the planet, anyone within a digital signature or within their reach. They are creating a human terrain map that can be used against you, by anyone."

Watch the video clip below for more details:


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To enjoy more of Glenn's masterful storytelling, thought-provoking analysis and uncanny ability to make sense of the chaos, subscribe to BlazeTV — the largest multi-platform network of voices who love America, defend the Constitution, and live the American dream.

Who were the people and groups involved with coronavirus research, and what really went down before and after the pandemic began? On "Glenn TV" this week, Glenn Beck heads to the chalkboard to outline a tale of negligence and then, coverup. The elites of the world - the people calling themselves experts - trusted the Chinese Communist Party with one of the most dangerous weapons we can imagine on this planet--a virus.

Glenn reveals who was involved in a definitive timeline, and argues: If proof of a lab leak does come out, the worlds needs to know EVERYONE that was involved. We must expose the coverup and attempt to control the narrative of the pandemic origins. Everyone from Big Tech, the media, the Chinese and even our own government have been involved. What lies behind the coverup could reveal the dirty secret that, in order to cut corners, the academic elites and government entrusted Communist China with a civilization-killing virus.

Watch the full episode below:

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To enjoy more of Glenn's masterful storytelling, thought-provoking analysis and uncanny ability to make sense of the chaos, subscribe to BlazeTV — the largest multi-platform network of voices who love America, defend the Constitution and live the American dream.

BlazeTV host Mark Levin said his new book, "American Marxism," provides proof that we're not just facing a coming Marxist revolution — it's already here.

Many Americans remain unconvinced, believing recent moves from the far left and the Democratic Party are just passing phases. But this is not a "fad," Levin told Glenn Beck on the radio program Tuesday.

"This isn't progressivism, or social activism, or democratic socialism. This is Marxism. Now, it may not be Marxism in every particular. But it's an Americanized form of Marxism," Levin explained.

"You need to pay attention to what's taking place ... You've seen it with your own two eyes. You saw the riots all summer long. You saw Black Lives Matter, which is headed by an openly proud Marxist. You see Antifa, which is a Marxist anarchist organization. You see the media, that you have been watching and reading, endorse every single one of these movements," he added.

"People have been brainwashed, or ... haven't been paying attention. They view this as a passing fad," Levin went on to say. "It's not. We all need to wake up to this. And if we have little differences, moderate Democrats, Libertarians and so forth, you better put them aside right now. Because we have a common enemy. I say enemy, not opponent. Not adversary. Enemy. And we need to be focused on defeating that enemy, rather than fighting among ourselves."

Watch the video clip below to hear Mark Levin explain how our individual freedoms are in serious jeopardy:

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Electric vehicles are the wave of the future. They are so much better for the environment. At least that's what we have been told, but is this correct?

On his TV special, Glenn Beck explained how electric vehicles (EVs) might not actually be the environmental solution we've been led to believe. In fact, they may not be a solution at all.

Glenn shared a recent article from LiveScience that reported:

A 2014 study published in the journal Proceedings of the National Academy of Sciences looked at the entire life cycle of an EV's emissions, from mining the metals required for the batteries to producing the electricity needed to power them, and then compared this with the average emissions of a gas-powered vehicle. The team found that when electric vehicles are charged with coal-powered electricity, they're actually worse for the environment than conventional gasoline cars.

He next shared an article from The Greenage, which stated:

The Union of Concerned Scientists has calculated that manufacturing a mid-sized EV with an 84-mile range results in about 15 percent more emissions than manufacturing an equivalent gasoline vehicle. For larger, longer-range EVs that travel more than 250 miles per charge, the manufacturing emissions can be as much as 68 percent higher.

Noting how electric vehicles and other fossil-fuel alternatives require the use of mined minerals like lithium, cobalt, zinc, copper, and nickel, among others, Glenn quoted an International Energy Agency report that warned reaching the goals of the Paris Agreement "would mean a quadrupling of mineral requirements for clean energy technologies by 2040. An even faster transition, to hit net-zero globally by 2050, would require six times more mineral inputs in 2040 than today."

"Can [you] predict which country is the world leader in processing the minerals needed for these batteries? Right, China," Glenn stated. "The average EV requires over 200 kilograms of minerals. The average gas vehicle requires 40 kilograms of minerals, mostly copper. A single EV has 22 pounds of lithium in it ... yet another way that the green reset of American energy is putting us all at the mercy of Communist China."

"Oh, and remember during the Obama administration when the world was gonna end' over fracking?" Glenn asked. "Well, the Institute for Energy Research now says, and I quote, 'Mining and processing of lithium, however, turns out to be far more environmentally harmful than what turned out to be the unfounded issues with fracking.'"

Watch the video clip from Wednesday night's episode of "Glenn TV" below for more details:

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