The current National Debt is almost 12 TRILLION DOLLARS, although some would argue that are actual debt is even higher when commitments to Medicare and Social Security are considered. As well as our trade debt and the debt of each person individually.
So how did we get here? Generations of fiscal irresponsibility.....In 2001 George W. Bush assumed the Presidency of the United States. He became the first President to assume office with a budget surplus in 30 years. Bush felt the obligation to return the surplus to whom it came from...The American Tax Payer, and did so by issuing a Tax Cut to reduce taxes by over 1.3 Trillion dollars over the course of 10 years. 8 months after his inauguration on September 11, 2001 the terrorist attacks on America brought forward a new economic burden, paying for a war and securing the United States. Subsequently the war on terrorism moved to Iraq in March 2003 all the while the tax cuts continued to come. Although my personal feelings on both wars was they were absolutely just and necessary; it is hard to over look Bush's refusal to stop tax cuts or increase taxes to pay for them. 8 years of war and tax cuts undoubtedly added to our National Debt, but they were hardly the only cause. Bush was also a massive spender with budgets totaling nearly 3 trillion dollars during his 8 years as President.
Where did this money come from to pay for all this spending then....Borrowing. During World War II when the government needed money it sold Bonds to the American Public; today when it needs money it sells our financial independence to foreign countries. The Chinese currently hold over 1 trillion dollars in US debt.
On January 20, 2009 Barrack Obama was sworn in as the 44th President of the United States. Facing a recession and escalating unemployment rates he called for a massive government stimulus program totaling nearly 800 Billion dollars. Recent history has shown that sweeping Government spending actions are not the secret formula to economic recovery and one only need to look to the West at the country of Japan.
A BRIEF HISTORY LESSON
During the late 1980's Japan was seeing a booming stock market as well as skyrocketing real estate prices. These bubbles burst causing home prices to bottom out and the stock market to crash (sound familiar?) Japan acted slowly instituting there own stimulus packages over several years focused on rebuilding there infrastructure and creating public works jobs (The American Reinvestment and Recovery Act anyone?). Despite these actions Japan's Gross Domestic Product (GDP- How much the country makes) grew only .2% over a 6 year period. It could be argued that no action would have caused there recession to be even worse, but there is no way in telling. What is for certain is that Japan's economic collapse that lead to the era known as the "lost decade" resulted in massive government spending causing enormous debts (200% compared to there GDP) and no solution to their economic turmoil.
The amount of criticism bestowed on George W. Bush for his spending should pale in comparison to that President Obama should feel. His 1st budget created a deficit of 1.7 Trillion dollars, more then every year of the Bush administration combined. Obama's own budget forecasts predict that during the 4 years of his Presidency the National Debit will grow to 20 trillion dollars.
So what does a huge National debt mean to us as individuals? Well think of it in these terms, you have a credit card with no spending limit and slowly but surely you start piling on the debt. You began to spend so much without paying it off that eventually what you owe is more then you earn. None of this is a problem until the credit card company asks you to pay them back. You would go completely bankrupt this is the outlook for our country if we do not do something about our out of control spending and attempt to lower our National Debt. Currently our Debt to GDP ratio is over 60%; if the country doesn't act quickly we could soon owe more then we make and could be facing bankruptcy as a country.
