The Treasury web site lists the current national debt at ~$10 trillion. What has been the national debt in the past? How quickly have past debts been erased? Do you have suggestions to follow the deficit and spending over time?
David Tucker responds:
To be frank, the government has not been debt free since the
time of Andrew Jackson in the 1830s. There have been times when the government
has gone without an annual deficit, but bond debt has still existed. Government
because of the nature of tax revenue receipts, often issues short term
revolving debt through government securities (Treasury bonds, notes, bills). However,
since 9/11 we have seen large annual deficits on a record scale. What we are in
danger of doing (THIS IS UNPRECENDENTED) is having a decade of record annual
deficits with no intent of returning to a balanced budget. Politicians have
realized that Americans do not care about deficits. We say we do, but in rank
of importance, it is way down on the list.
Bruce Damasio responds:
I would first discuss the difference between deficit and
debt and how it impacts individuals and then government. Many texts have
sections on this and graph which show the rise and fall of the deficit over
time in US History. I would look here first. Then, I suggest for you a book by
David Leonhardt called The Big Fix for looking into this issue. You can go to
the website for the Center for Economic Education (www.ncee.org or also www.ncee.net ) for lessons on this issue.
The debt has been higher in proportion to the economy in the
past and it was much higher after World War II and in the 1950's for the nation
then. Interest payments on the debt will impact future tax revenues, this could
be studied as well.
A good discussion could be held on the role of government
and is it a business to have a balanced budget or make money or is it a model
to provide services and exist without normal business responsibilities?
Peggy Pelt responds:
First, let me explain the difference between two phrases. "National
deficit" is the amount government spending exceeds its revenue in a fiscal
year. "National debt" is the accumulation of all the deficits. National
deficits have ranged from (approximately) $5 billion to $425 billion in the
last thirty years. Budget surpluses (when government revenue exceeds spending
in a fiscal year) occur rarely - in 1969 and 1998 - 2001. Even when a surplus
occurs it means for that year spending was less than revenue; it does not mean
the debt accumulated in previous years has been paid off.
The government's revenue and spending are largely affected
by how the economy is doing. If the economy is growing revenue increases and
spending for unemployment related social programs decreases. The reverse is
true when the economy is in a recession. I would suggest comparing government
spending as a percentage of GDP to see its impact on the economy. Another idea
would be to compare government spending with the overall performance of the
economy to see the impact economic conditions have on the government's
spending.
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