First of a series
The United States national debt is projected to reach $1 trillion before the end of the year. That’s a thousand billion dollars!
At that figure, the government will owe about $4,415 for every man, woman and child in the country all 226,500,000 of them.
If the amounts seem incredible to today’s generations accustomed to astronomical figures, they’d shock the frugal Founding Fathers! George Washington and Thomas Jefferson, among others, counseled strongly against burdening prosperity with major debt accumulations.
The whopping national (federal) debt – most of it incurred in the past half century – is the amount owed by the government from borrowing to cover deficit spending.
It does not include obligations of states, counties, cities, individuals and corporations; nor interest on the national debt.
Fed by enormous budget deficits, the debt has more than doubled in the inflation-ridden peacetime years since the Vietnam War.
It is projected by the Reagan Administration to reach $958 billion in April $987.4 billion by Sept. 30 (end of fiscal year 1981), and $1 trillion sometime in November or December.
A burdensome byproduct ls the strain interest on the debt places on the federal budget. Interest now constitutes the third largest outlay – behind retirement-benefit programs and national defense.
It is projected at $94.1 billion for the current fiscal year, up from $74.8 billion for fiscal 1980 – and will soar to $106.5 billion in 1982 although this could be sliced to some extent by Reagan budget cuts.
The interest figures, quoted in the Congressional Record, are from projections made by the former Carter Administration in submitting its tentative ’82 budget last January.
You get a realistic idea of the size of the interest bill when you realize the figure for the current year amounts to about $300 million for every weekday of the year (Sundays excluded) … and note that as recent as 1960 the entire federal budget was only $92.2 billion.
Many have argued in Congress that deficit financing is a key cause of high interest rates and the inflation level which may hit double digits in 1981 for the third straight year.
The inflation rate, at 9 percent in 1978, rose to 13.3 in 1979 and settled slightly to 12.4 percent last year – the worst inflation since 1916-19 during World War I when the rate exceeded 10 percent four consecutive years.
President Reagan’s supply side economics and his drive to balance the budget by 1983 or 1984 depart from policies generally practiced in the past few decades.
To be sure stout defenders of the red ink rationale and Keynesian spending theories widely embraced in the past half century remain.
Many lawmakers also also appropriate debt levels with the Gross National Product. Sen. Robert C Byrd, D-W.Va reminded senators recently that ”the public debt has been falling in terms of the GNP.” in 1960 the public debt stood at 56.9 percent of the GNP, he said. “Twenty years later it stands at about 35 percent.”
During the February congressional debate over raising the debt ceiling from $935 to $985 billion, Sen Russell B Long, D-La. noted that in 1946 total public and private debt was 189 percent of the GNP. But by 1979, the percentage had declined to 178 percent though the figures had climbed dramatically.
(The debt limit – raised 31 times in the past two decades – was elevated to $985 billion to accommodate spending commitments of the Carter Administration for the current fiscal year. It’s a foregone conclusion the limit will have to be raised above the trillion-dollar mark early in fiscal ’82 which beings Oct. 1.)
Senator Long quoted Treasury Department figures as showing the private debt increased from 73 to 138 percent of the Gross National Product in the 1946-79 period – almost double. “But the federal debt has declined from 110 percent of the GNP to 28 percent.”
While deploring high interest rates and conceding ”It would be good to retire the federal debt … pay it off completely,” Long said that in the over-all perspective, the trend has been toward a “lesser debt as a percentage of wages and salaries and the GNP.”
Congress, with the constitutional responsibility for the budget, currently is debating spending cuts proposed by President Reagan and Budget Director David Stockman to slice $48.6 billion from the Carter ’82 budget and $6.4 billion from current-year outlays.
The new regime has set a budget ceiling of $695.3 billion for fiscal ’82.But even this figure projects a $45 billion deficit.
Next: History of the national debt.