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

Glenn gives the latest coronavirus numbers, updating YOU on everything needed to know as Americans and officials monitor China's new COVID-19 virus:

Daily Stats as of 5:30 AM CT (from John's Hopkins)

  • Total Confirmed Cases Worldwide: 486,702 (up from 434,595 Yesterday)
  • Total Confirmed Deaths Worldwide: 22,022 (up from 19,603 Yesterday)
  • Total Confirmed Recovered Worldwide: 117,448 (up from 111,853 Yesterday)
  • 4% of Active Cases are considered serious (requiring hospitalization) Steady from 4% Yesterday, and down from 19% in February
  • Note that 12% of US Confirmed Cases do currently require Hospitalization, but that number is expected to drop toward the international average as more people are diagnosed through testing.
  • US has 65,581 Confirmed cases and 1,036 Deaths, up from 54,941 cases and 784 Deaths yesterday
  • US has 428 total officially recovered, against 1,036 official deaths. Again, US numbers are expected to normalize toward international averages as more mild cases are diagnosed.

Brother, Can You Spare $2 Trillion? https://www.cnbc.com/2020/03/25/coronavirus-stimulus-bill-updates-whats-in-the-2-trillion-relief-plan.html
  • US Senate Passes the largest economic stimulus bill in world history.
  • The Senate passes a roughly $2 trillion economic relief plan in response to the coronavirus pandemic.
  • It includes direct payments to Americans, strengthened unemployment insurance, loans to businesses small and large and increased health care resources for hospitals, states and municipalities.
  • Loans to small businesses are technically 'grants' covering payroll and rent payments. Grants do not have to be repaid.
  • It is unclear when the House will pass the legislation, though it aims to do so Friday.
Every American Will Get $1,200 in 2-3 Weeks, $2,400 plus up to 4 months Unemployment Benefits https://www.dailymail.co.uk/news/article-8152139/Every-American-four-months-unemployment-checks-earning-95-000.htm
  • Workers will get four months of unemployment pay plus additional $600 each.
  • Direct checks to Americans include 1,200 per adult making up to $75,000 a year before phasing out and ending altogether for those earning more than $99,000
  • That would result in $2,400 to a married couple making up to $150,000, with an additional $500 per child for each household.
  • 'Our expectation is within three weeks we will have direct payments out,' Treasury Secretary Steve Mnuchin said.
Cuomo Confirms What Introverts Have Long Known: Social Distancing Works https://www.scmp.com/news/china/article/3077011/coronavirus-new-york-governor-andrew-cuomo-says-early-signs-show-social
  • Stringent density control measures may be working to contain the coronavirus in New York state, the epicenter of COVID-19 outbreak in the US, as the rate of hospitalization shows early signs of abating, Governor Andrew Cuomo said on Wednesday.
  • New York, which has 19 million residents and nearly 31,000 infections, now accounts for 56 per cent of the confirmed cases in the country and more than 7 percent of the world's total.
  • Cuomo had ordered all but essential businesses to shutter by Sunday evening and residents to limit their outdoor activities and practice social distancing, effectively putting the state on pause.
  • On Tuesday, the number of hospitalized patients had doubled every 4.7 days, slowing from the rate of every 3.4 days on Monday and every two days on Sunday, Cuomo said at his daily coronavirus briefing.
  • "This is a very positive sign," he said. "The arrows are heading into the right direction."
Were the Beads Worth It? Mardi Gras Gets Blame for Big Easy Outbreak https://news.trust.org/item/20200325200808-oc1ie
  • "Mardi Gras was the perfect storm, it provided the perfect conditions for the spread of this virus," said Dr. Rebekah Gee, who heads up Louisiana State University's health care services division.
  • She noted that Fat Tuesday fell on Feb. 25, when the virus was already in the United States but before the Centers for Disease Control and Prevention and national leaders had raised the alarm with the American public.
  • "New Orleans had its normal level of celebration, which involved people congregating in large crowds and some 1.4 million tourists," Gee said. "We shared drink cups. We shared each other's space in the crowds. People were in close contact with catching beads. It is now clear that people also caught coronavirus."
  • New Orleans is on track to become the next coronavirus epicenter in the United States, dimming hopes that less densely populated and warmer-climate cities would escape the worst of the pandemic, and that summer month could see it wane.
  • Authorities have warned the number of cases in New Orleans could overwhelm its hospitals by April 4.
  • New Orleans is the biggest city in Louisiana, the state with the third-highest caseload of coronavirus in the United States on a per capita basis.
  • The growth rate in Louisiana tops all others, according to a University of Louisiana at Lafayette analysis of global data, with the number of cases rising by 30% in the 24 hours before noon on Wednesday.
  • On Tuesday, U.S. President Donald Trump issued a major federal disaster declaration for the state, freeing federal funds and resources.
US Military Officially On No-Travel Lockdown https://news.trust.org/item/20200325203242-zgoc4
  • Defense Secretary Mark Esper has issued a "stop all movement" order to the U.S. military halting travel and movement abroad for up to 60 days in an effort to limit the spread of the coronavirus through the ranks.
  • The measure is by far the Defense Department's most sweeping to date and will affect forces around the world.
  • Esper said in an interview that the order applied to all U.S. troops, civilian personnel and families, but noted that there would be some exceptions.
  • "The purpose is to make sure that we're not bringing the virus back home, infecting others, that we're not spreading it around the military," Esper said.
  • The order does include personnel who were to have been scheduled to be formally discharged from the Military in April or May.
  • Esper said one exception to the order would be the drawdown underway in Afghanistan, which will continue.
For The Best Darn Facemask In The Whole Wide World... https://www.foxnews.com/us/mypillow-other-us-companies-making-face-masks-to-meet-coronavirus-shortages
  • In Minnesota, the MyPillow company is refocusing 75 percent of its production to face masks for health care workers.
  • "We have the capacity to make a lot of things at big rates and we're going to be going hopefully from 10,000 units a day to 50,000 units a day in a very short period of time," CEO Mike Lindell told FOX 9 of Minneapolis-St. Paul.
  • The masks will go to hospitals in Minnesota as well as other states, he said. "Whatever it takes."
  • MyPillow worked with the Trump administration to get the proper design, Lindell told local Fox News 9.
  • Lindell joins literally hundreds of other companies in the US who have heeded the call of the Trump Administration to covert production to respirators, masks, ventilators, gowns and other needed medical equipment.
Further Evidence that COVID-19 Is Seasonal and May Spread Less in Summer Months https://news.yahoo.com/coronavirus-could-become-seasonal-top-us-scientist-001146451.html
  • There is a strong chance the new coronavirus could return in seasonal cycles, a senior US scientist said Wednesday, underscoring the urgent need to find a vaccine and effective treatments.
  • Anthony Fauci, who leads research into infectious diseases at the National Institutes of Health, told a briefing the virus was beginning to take root in the southern hemisphere, where winter is on its way.
  • "What we're starting to see now... in southern Africa and in the southern hemisphere countries, is that we're having cases that are appearing as they go into their winter season," he said.
  • "And if, in fact, they have a substantial outbreak, it will be inevitable that we need to be prepared that we'll get a cycle around the second time," Fauci said, referring to a 2nd cycle in the US late next fall in November or December.
  • "It totally emphasizes the need to do what we're doing in developing a vaccine, testing it quickly and trying to get it ready so that we'll have a vaccine available for that next cycle."
  • Fauci's comments suggesting the virus does better in colder weather than it does in hot and humid conditions follows a recent Chinese research paper -- still preliminary and awaiting peer-review -- that reached the same conclusion.

Glenn gives the latest coronavirus numbers, updating YOU on everything needed to know as Americans and officials monitor China's new COVID-19 virus:

Daily Stats as of 5:30 AM CT (from John's Hopkins)

  • Total Confirmed Cases Worldwide: 434,595 (up from 392,156 Yesterday)
  • Total Confirmed Deaths Worldwide: 19,603 (up from 17,138 Yesterday)
  • Total Confirmed Recovered Worldwide: 111,853 (up from 102,850 Yesterday)
  • All 195 Countries On Earth have confirmed cases Antarctica (not a country) Still No Confirmed Cases. Penguins officially confirmed to NOT be carriers for COVID-19.
  • 4% of Active Cases are considered serious (requiring hospitalization) down from 5% Yesterday, and down from 19% in February
  • Note that 13% of US Confirmed Cases do currently require Hospitalization, but that number is expected to drop toward the international average as more people are diagnosed through testing.
  • US has 54,941 Confirmed cases and 784 Deaths, up from 46,168 cases and 582 Deaths yesterday
  • US has 379 total officially recovered, against 784 official deaths. Again, US numbers are expected to normalize toward international averages as more mild cases are diagnosed.

LA County Sherrif Orders Gun Stores Closed https://www.foxla.com/news/la-county-sheriff-orders-gun-stores-to-close-adds-1300-deputies-to-patrol
  • Los Angeles County Sheriff Alex Villanueva declared gun stores as nonessential businesses that will be forced to close.
  • The Sherrif also confirmed that he's released 1,700 nonviolent inmates from county jails.
  • Villanueva also said he's adding 1,300 deputies to patrol.
America Loses 500,000 Millionaires to COVID-19 - Bernie Sanders Elated https://www.msn.com/en-us/finance/markets/america-e2-80-99s-millionaire-ranks-shrink-by-500000-in-record-time/ar-BB11DrqN
  • At the close of 2019, there were an unprecedented 11 million American millionaires, a reflection of the longest bull market in history thanks to ultra-low interest rates and tax cuts.
  • Fast forward just a few months and it's a starkly different picture. The number of households in the U.S. above that threshold has dropped by at least 500,000 as of Friday, according to research firm Spectrem Group.
  • The tandem financial and health crises wrought by COVID-19 have disproportionately eroded the fortunes of the wealthy, who are more likely to own equities than the overall population.
  • At the end of 2019, the top 1% of households owned 53.5% of equities and mutual fund shares, according to Federal Reserve statistics.
  • The losses affected the rich at every level, from the mass affluent to those worth more than $25 million, according to the report. The wealth destruction at the very top has been especially steep, with the top 1% of households losing over $7.9 Trillion in wealth so far in 2020.
50% of Americans Living Under Shelter In Place or Home Quarantine Orders https://www.washingtonexaminer.com/news/more-than-half-of-us-population-will-be-under-orders-to-stay-home-by-midweek
  • The majority of the public will be ordered to stay home in the coming days as the coronavirus pandemic sweeps the nation.
  • A total of 13 states and at least 16 municipalities have enacted measures to keep residents inside their homes to prevent the spread of the virus, according to CNN.
  • That number, which amounts to 148,577,262 people, or 45% of the population, is expected to grow this week as five more states and nine more municipalities institute additional measures.
  • After the new orders go into effect, a total of 176,385,537 people, or 54% of the population, will be asked to stay home.
  • Many states and cities have not named a specific date, although some, such as LA County and the State of New York, have identified April 19th as the target 'end' of the at-home quarantine orders.
Uniformed Military Personnel Set Up Make-shift Morgue Outside NYC Hospital https://nypost.com/2020/03/24/makeshift-morgue-for-coronavirus-victims-set-up-outside-nyc-hospital/
  • In a scene reminiscent of Hollywood disaster movies (and more recently China, Italy and Spain), US Military personnel have set up a tent-based morgue outside of Bellvue Hospital in NYC.
  • Two refrigerated trailers were trucked to the site at 30th Street and the FDR Drive, along with a customized RV with a printed sign labeled: "MOBILE COMMAND CENTER — MEDICAL EXAMINER."
  • A team of men wearing camouflage fatigues and face masks set up a series of white tents that form a tunnel to a larger, white tent.
  • Other men wearing jackets that identified them as members of the NYPD and the city's Office of the Chief Medical Examiner were also at the scene.
  • A source familiar with the operation said that additional refrigerated trailers would be brought to the site and that similar set-ups would be built up outside other hospitals.
  • "The plan is for them to be there and throughout the city," the source said, with as many as 6 temporary morgue locations near hospitals in New York City.
UV Rays Proven to Destroy SARS-Cov-2 Virus https://www.accuweather.com/en/health-wellness/what-infection-rates-in-iceland-and-australia-may-reveal-about-how-covid-19-could-spread-in-the-us/707057
  • The infection rate for COVID-19 is 22 times higher in Iceland as compared to Australia.
  • The research comes as scientists in Hong Kong demonstrate that SARS-CoV-2, the virus responsible for COVID-19, is easily destroyed with UV light, just like all other known Coronaviruses.
  • "Direct exposure to UV light breaks down the membrane that houses the RNA of the virus," Dr Lon Kiang, lead researcher of the study said. Without the membrane, the virus cannot attach itself to healthy cells in the human body.
  • "This was expected, but is still certainly good news," he said.
  • Researchers said the findings may indicate that the virus will have a harder time spreading during warmer summer months, when more UV light strikes surfaces, including clothing and human skin, which may contain viral particles.
  • Scientists warned against directly and intentionally exposing skin to UV lights, which can cause burns and carries other risks, such as Cancer.

The mainstream media and the left are eager to report anything negative about President Donald Trump, even if it turns out to be Chinese Communist Party propaganda and disinformation.

On "GlennTV," Glenn uncovered some of the lies China's Communist Party is peddling to its own people and the rest of the world.

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Diagnosed with pneumonia and coronavirus, Rio Giardinieri, 52, was admitted to the ICU at Joe DiMaggio hospital in South Florida. After more than a week without showing any improvement, doctors told him there was nothing more they could do. Desperately ill, Giardinieri started saying his "goodbyes" to family and friends.

That's when a friend told him there was a potential "cure" for coronavirus, an anti-malaria drug called hydroxycloroquine. Though doctors at the hospital said they couldn't prescribe hydroxycloroquine, they put Giardinieri in touch with an infectious disease doctor who authorized the use. The next morning, he says he woke up feeling "absolutely perfect."

Giardinieri joined Glenn Beck on the radio program Tuesday to share his remarkable story and to weigh in on why he thinks information about this promising treatment for COVID-19 isn't being made more readily available.

"I'm not a scientist. I'm not a doctor. I can just tell you how I feel. And I know that I was not doing well. In my mind, I didn't believe I was going to be here by the morning," Giardinieri said. "I don't know what else to attribute [for recovery] but that medicine ... and it's not just me that it's worked for. There're many people this has worked for. So, you know, I certainly understand the hospital's position. They may not be too happy me telling the story. But the facts are the facts."

Watch the video below to catch more of the conversation:

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