On August 4th 1999, the US government announced that for the first time in 25 years, they were going to try and pay down the national debt. The US has had a public debt ever since its inception in 1776, due to debts incurred during the American Revolutionary War against Great Britain.
How Much Debt Does the USA Really Have?
In the past century, this debt has ballooned, currently just over twelve trillion dollars. There are approximately 300 million American citizens, which means that the total debt for every man, woman, and child in America is over $30,000.
During WWII debt passed the $260 billion dollar mark, then stayed relatively stable with inflation until the 1980's. However, during the 80's the debt grew sharply.
The American Debt During the 1980's
The debt quadrupuled during the Reagan Presidency of the 1980's. How did that occur?
A devastatingly stubborn recession hit the USA at the end of the 1970's and into the 1980's, and Reagan saw government as one of the problems. He passed one of the most sweeping tax cuts in history. Yet he also maintained the social security programs first introduced by Franklin Roosevelt, Reagan's idol. This extreme recession, and increased spending for social programs, along with tax breaks for America, led to a nearly 4X growth in the national debt.
The American Debt During the 1990's
Under Bill Clinton, the national debt actually began to shrink, as the President and his advisors were forced to make many tough decisions.
One of the bills enacted by President Bush Sr. was the "Pay As You Go" bill, which stated that no new spending projects could be approved by government without cutting the spending in another area, or increasing taxes appropriately. Thus, the government could only approve spending bills that they could, theoretically, pay for.
The debt in 1999 was $3.6 trillion dollars, and for the second straight year, the government was faced with a surplus; 1998 had seen a surplus of almost $70 billion. The Republicans called for sweeping tax cuts, to help "ease the stress" on small businesses and families in America.
Official projections suggested trillions of dollars in budget surpluses over the next 15 years, boosted by a strong economy and strict controls on spending. But there was no agreement on what to do with the money.
The Republicans proposed a $700 billion tax cut, while President Clinton and the Democrats wanted to add funds to the social security retirement programme and Medicare, which provides health care for older people.
Ultimately, they paid some of it back onto the national debt.
The Debt Under President George W. Bush
In 2001, George W. Bush won perhaps the most bitterly contested presidential race of the past century over Al Gore. Almost immediately he sprung into action, trying to avoid the same fate that crippled his fathers political career almost ten years earlier: tax increases.
Within three months of his presidency, Bush signed one of the largest tax breaks in history, close to 1 trillion dollars over eight years.
Then, September 11, 2001 changed the face of Bush's presidency forever. The 9/11 terrorist attacks would define a generation, and in turn, indebt the next generation of Americans.
George Bush launched the Afghanistan and Iraqi wars, while at the same time, imposing more and more tax breaks on Americans. This was an unprecedented act: no president had ever launched a war (nevermind two wars) while at the same time reducing taxes. Wars are very expensive.
So was the new medicare bill passed by Bush. In 2002, the "Pay As You Go" bill that hampered Clinton's spending as president, and in turn developed some sort of fiscal responsibility back into the White House, expired. Bush Jr. was free to spend however he wanted, and used that to his advantage by passing a new medicare in 2003 that required government to subsidize healthcare spending for seniors.
The combined costs of medicare, the Iraq and Afghan wars, and the widespread reduction in taxes (mostly for the wealthy Americans) led to a quadrupling of the American national debt, and destroyed any semblance of fiscal responsibility in America. The debt is expected to double, worth over $23 trillion, in the next ten years.
How Much of the American Treasury is Foreign Owned?
As of January, 2009 the five largest stake holders in the American treasury, or, the five largest nations the the USA is in debt it, are:
- People's Republic of China ($739.6 billion)
- Japan ($634.8 billion)
- Oil Exporters (OPEC) ($186.3 billion)
- Caribbean Banking Centers ($176.6 billion)
- Brazil ($133.5 billion)
To learn more about the American National Debt, you can watch the very interesting documentary $10 Trillion and Counting from PBS, or read the BBC Business Reports Archive.
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