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

Award-winning investigative journalist Lara Logan told Glenn Beck on the radio program Wednesday that a network of radical extremist terrorist organizations, which includes Antifa, are coordinating and escalating many of the violent riots in the wake of George Floyd's death.

Lara, who has done extensive reporting on Antifa, said it's "extraordinary" that so many Americans in the media and politics are defending the "very violent terrorist organization."

"[The media is] pretending that they care about journalism. They don't. They care about silencing, intimidating, destroying, annihilating, and getting us all to self-sensor so we don't cover any of the subjects they don't want us talking about," she said.

"For those of us who've followed [Antifa] for a while, and know what they're doing and what their agenda is, what has always been troubling is the way so many people in the media and in the political establishment have given them cover to operate," Laura added. "These are extremists. And you see a lot of parallels between extremists on the left and the right ... they pretty much operate the same way, exactly. And there's no difference between what Antifa is doing and the 'Brown Shirts' of Nazi Germany. Or the 'Black Shirts' of Mussolini."

She read the 10 points of action listed by an extremist group called the "Revolutionary Abolitionist Movement", which culminates with "Liberation begins where America dies."

Glenn recalled a prediction he made approximately 15 years ago, that "socialist, communists, radicals, anarchists, [and] Islamists would all work together ... they would all see the opportunity and work toward the same goal. And that's destruction of capitalism, and destruction of the Western world."

"A few years ago, I probably would not have agreed with you on that," Laura responded. "But I now see that you're absolutely correct."

Watch the video below to hear Lara detail evidence to expose the truth about Antifa:

Media targets Lara Logan for exposing the truth about Antifa

The media pretends to care about good journalism, but what they really care about silencing, intimidating, destroying, annihilating and getting us all to...


Use code GLENN to save $10 off one year of your subscription.

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The Trump-deranged media is calling the president a "coward" because he was moved to an underground bunker as riots erupted outside the White House over the weekend.

Former Secret Service agent Dan Bongino joined the "Glenn Beck Radio Program" Tuesday to set the record straight. He told Glenn that under Title 18, US Code 3056, the Secret Service has the authority to protect the president however they deem necessary, with or without his consent.

Dan explained that the severity of the White House riots, which resulted in at least 50 Secret Service agents being injured, would very likely have warranted overriding the president's preference on whether or not to take shelter.

"Shame on the media ... for painting this as some kind of situation where Trump ran like a coward," Dan said. "Which is totally false and made-up. [...] They're morons. These are imbeciles with double digit IQs who are only in this to aggravate an already-bad situation. And it's a shame, because they're really incentivizing this kind of stuff to happen."

He also made it clear that the so-called protests over the death of George Floyd were actually "very strategic" riots organized by "Antifa terrorists."

"It was not even a protest. It should have been, and could have been ... but that's not what it was. It was an insurrection. It was a riot," Dan stated.

"I can tell you, from sources of mine that were there, [who are] more than credible and unimpeachable, that the attack at the White House -- and that's what it was over a period of days -- was very organized. It was done using very strategic tactics," he added. "I want to be crystal clear, this was organized by Antifa terrorists. It's not a joke. It's not hyperbole. These were people that were committed to an insurrection that was thankfully put down."

Watch the video below for more details:

Dan Bongino: Trump is NOT a Coward Hiding in a Bunker


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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 multiplatform network of voices who love America, defend the Constitution and live the American dream.

The media has been trying to discredit BlazeTV's Elijah Schaffer after he recorded a disturbing video of a man being brutally beaten and stoned almost to death by rioters Saturday evening in Dallas.

Elijah joined Glenn Beck on the radio program Monday to set the record straight.

"The very dishonest far-left media is working tirelessly at the moment to completely, not only discredit myself, but they always say, 'Elijah Schaffer who works for Glenn Beck's BlazeTV.' As if that's an insult. So I'm going to clear the air right now," he told Glenn.

"There was a group of about, I would say 150 rioters. They were not protesters. They were breaking windows. They broke into a bank. They broke into a bar. They were looting alcohol and partying on the streets while breaking glass. These were not people who were grieving over black lives," he added. "The police had lost control of the city."

Elijah went on to describe the violent scene, detailing the events leading up to the brutal beating of a man who was apparently trying to defend a local bar. Elijah posted a video of the incident on Twitter Saturday night.

*Warning: graphic content*

"Rioters with rocks and bricks and bats and weapons, 150 or more, were accosting him as he stood in front of the bar," Elijah said. "Then they started stoning him, Glenn! Medieval! Throwing rocks and bricks.... We're in America. This is 2020. We do not stone people in the United States of America!"

Watch the video below for more details:

*Warning: graphic content*

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A new Pew Research Center report shows the death toll in the United States from COVID-19 is "heavily concentrated" in Democratic congressional districts.

According to the analysis, more than half of all COVID-19 deaths in the U.S. occurred in just 44 (approximately 10 percent of) congressional districts, and 41 of those 44 hardest-hit districts are represented by Democrats, while only three are represented by Republicans.

"A new Pew Research Center analysis of data on official reports of COVID-19 deaths, collected by the John Hopkins University Center for Systems Science and Engineering, finds that, as of last week, nearly a quarter of all the deaths in the United States attributed to the coronavirus have been in just 12 congressional districts – all located in New York City and represented by Democrats in Congress. Of the more than 92,000 Americans who had died of COVID-19 as of May 20 (the date that the data in this analysis was collected), nearly 75,000 were in Democratic congressional districts," Pew reported.

Filling in for Glenn Beck on the radio program this week, Pat Gray and Stu Burguiere argued that, while the coronavirus should never have been made into a partisan issue, the study certainly makes a strong statement in favor of GOP leadership.

Watch the video below:


Want more from Glenn Beck?

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 multiplatform network of voices who love America, defend the Constitution and live the American dream.