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U.S. public debt - How bad?

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posted on Aug, 14 2005 @ 11:12 PM
I was doing some research and found this to be a good summary. As can be seen, the Unites States is not in as bad of shape that some would have you believe. Interesting indeed.

U.S. public debt - From Wikipedia, the free encyclopedia.

The U.S. public debt, commonly called the national debt or the gross federal debt, is the amount of money owed by the United States federal government. This does not include the money owed by states, corporations, or individuals. As of May 2005, the total government debt is approximately $7.8 trillion, i.e. $7,800,000,000,000 ($7.8 × 1012). This is more than ten times the amount of United States currency in circulation as of 2005, estimated to be $730 billion ($7.3 × 1011). The debt can also be measured as a fraction of the nation's gross domestic product (GDP); at present, U.S. public debt is about 65% of the GDP, a rather average level when compared to other nations.

Structure of the debt

The Bureau of the Public Debt divides the national debt into two main categories: debt held by the public, and intragovernmental holdings. Intragovernmental debt includes money for government trust funds, such as pension plans and the debt for social security which is about $1.7 trillion as of May 2005. Overall, intragovernmental holdings account for over $3.1 trillion of the total debt at this time.

The remaining $4.6 trillion or so has been purchased by the public, including foreign entities. This largely comes from the issuance of Treasury securities. Nearly half ($2.2 trillion) is composed of Treasury notes (aka T-notes), while T-bills and T-bonds (savings bonds) cover most of the remaining public portion of the debt. Bonds sold for infrastructure projects are also part of the national debt.

It is common for individual Americans and businesses to buy bonds and other securities, though much of the debt is now held overseas. At the end of 2004, foreign holdings of Treasury debt were $1,886 billion, which was 44 percent of the total debt held by the public. Foreign central banks owned 64 percent of the Federal debt held by foreign residents; private investors owned nearly all the rest (figures are from the Analytical Perspectives of the 2006 U.S. Budget, page 257 [1]). The country holding by far the most debt is Japan which held $679 billion at the end of March, 2005. In recent years the People's Republic of China has also become a major holder of Treasury debt, holding $223.5 billion at that time. [2]

Calculating the debt

The Bureau of the Public Debt keeps track of money owed by the U.S. government on a daily basis, also issuing monthly and yearly reports. While the numbers provided by the bureau are the most-commonly used, some economists prefer to use other methods and include additional debts.

There is a question among economists in the United States as to whether the debt held by the 50 individual states should be counted as part of the national debt. Some economists include sums related to bills the government must pay for goods and services it has contracted for in the current fiscal year.

The debt is usually viewed as an absolute number, but it can also be measured as a percentage of the gross domestic product (GDP). By this measure, the United States is merely an average nation. The economy of Japan could be more worrisome, as the country has a debt of about 165% of its GDP.

Another method is to measure by the amount payable in any given year. For example, much of the debt is payable in 10, 20, or 30 years—much like a mortgage. There is debate about how such debt should be represented. Sometimes, alternative measures are used to support their own political arguments.
In several cities around the United States, but most famously at Times Square in New York City, there are national debt clocks—electronic billboards which supposedly show the amount of money owed by the government. Some also attempt to show the money owed per capita or per family. A division of the United States Treasury Department known as the Bureau of the Public Debt calculates the amount of money owed by the national government on a daily basis. There is a significant level of fluctuation day-to-day, both up and down, so any "clocks" must be continually re-set with proper values.

A brief history of the debt

The United States has had public debt since its inception. Debts incurred during the American Revolutionary War and under the Articles of Confederation led to the first yearly reported value of $75,463,476.52 on January 1, 1791. Over the following 45 years, the debt grew and then contracted (almost?) to zero in late 1834. On January 1, 1835, the national debt was only $33,733.05, but it quickly grew into the millions again.

The first dramatic growth spurt of the debt occurred because of the Civil War—it was just $65 million dollars in 1860, but passed $1 billion in 1863 and ended up at $2.7 billion following the war. The debt slowly fluctuated for the rest of the century, finally growing steadily in the 1910s and early 1920s to roughly $22 billion as the country paid for involvement in World War I.

The buildup and involvement in World War II brought the debt up another order of magnitude from $43 billion in 1940 to $260 billion following the war. After this period, the debt's growth closely matched the rate of inflation until the 1980s, when it again began to skyrocket:

* 1981 $1 trillion
* 1986 $2 trillion
* 1990 $3 trillion
* 1992 $4 trillion
* 1996 $5 trillion
* 2002 $6 trillion
* 2004 $7 trillion

The public debt briefly started to go down in 2000 when the country had a budget surplus, but quickly started growing again.

At any given time (at least in recent decades), there is a debt ceiling in effect. If the debt grows to this ceiling level, many branches of government are shut down or only provide extremely limited service. However, the ceiling is routinely raised by passage of new laws by the United States Congress every year or so. Still, Congress has failed to act in time at least once. In 1995, the federal government closed down for six days from November 14 to November 20 due to partisanship wrangling between the congress and then-President Bill Clinton.

Viewed alternately as a percentage of the GDP, the national debt rose sharply during World War II, reaching about 122% of GDP in 1946. As soon as the conflict ended, the debt began declining, reaching a postwar low of 32.6% of GDP in 1981. The debt then started rising again and peaked at 67.3% of GDP in 1996. It then dropped to 57.4% of GDP by 2001 but began rising again after congress and the George W. Bush administration implemented several tax cuts (though the economy also hit a recession at the time). In 2004, the debt reached 63.7% of GDP and is projected to continue rising, reaching 70% of GDP in 2010. It should be noted that the debt of United States on par with what it is in many other developed countries, such as Germany and France. In any case, all of the above debt figures can be found in Historical Table 7.1 of the 2006 U.S. Budget. [5]

The famous national debt clock in New York City's Times Square was actually deactivated in 2000 when the debt began to go down. However, following large increases, the clock was reactivated a few years later. (Interestingly, some "man on the street" interviews showed that some people felt that the sign's deactivation meant that the debt had been eliminated, though it remained at roughly $5 trillion.)

U.S. public debt

These are two lists of the world's economies sorted by their Gross domestic product (GDP) at market or government official exchange rates.

The first list was produced by the World Bank in July 2005 for GDP figures of 2004 based on what has already happened.

The second list includes ranking for the world economies with for the year 2005 produced by the International Monetary Fund in April 2005 based on projections for what is expected to happen.

List by the World Bank List by the IMF
Rank Country 2004 GDP
millions of USD
— World 40,885,976
— European Union 11,139,013
1 United States 11,667,515
2 Japan 4,623,398
3 Germany 2,714,418
4 United Kingdom 2,140,898
5 France 2,002,582 +
6 Italy 1,672,302
7 People's Republic of China (Mainland) 1,649,329
8 Spain 991,442
9 Canada 979,764
10 India 691,876

List by the IMF
Rank Country 2005 GDP
millions of USD
— World 44,168,157
— European Union 13,926,873
1 United States 12,438,873
2 Japan 4,799,061
3 Germany 2,906,658
4 United Kingdom 2,295,039
5 France 2,216,273
6 People's Republic of China (Mainland) 1,843,117
7 Italy 1,836,407
8 Spain 1,120,312
9 Canada 1,098,446
10 Russia 755,437

List of countries by GDP (nominal) per capita

This is a list of countries of the world sorted by their Gross Domestic Product (nominal) per capita, the value of all final goods and services produced within a nation in a given year, divided by the average population for the same year. GDP dollar numbers are derived from foreign exchange rates of the country's currency.
Rank Country GDP (nominal) per capita
US dollars
— World 6,851
1 Luxembourg 77,595
2 Norway 61,852
3 Switzerland 52,879
4 Iceland 52,063
5 Ireland 50,303
6 Denmark 49,182
7 Sweden 42,392
8 United States 41,917
9 Qatar 39,607
10 Austria 39,292

List of countries by GDP (PPP) per capita

This is a list of countries of the world sorted by their gross domestic product (GDP) at purchasing power parity (PPP) per capita for the year of 2005, the value of all final goods and services produced within a nation in a given year, divided by the average population for the same year. GDP dollar estimates here are derived from purchasing power parity (PPP) calculations.

Rank Country GDP (PPP) per capita
International dollars
— World 9,239
1 Luxembourg 66,821
2 Norway 41,941
3 United States 41,557
4 Ireland 40,003
5 Iceland 35,686
6 Denmark 34,718
7 San Marino 34,600*
8 Canada 34,444
9 Switzerland 33,168
10 Austria 32,962

posted on Aug, 19 2005 @ 03:01 AM
Buy some gov bonds, tell congressmen to stop meaningless spending, ask Europe for its unpaid war debts plus interest (i don't care if we told them they didn't have to pay!) and let's move on.

posted on Aug, 20 2005 @ 12:38 AM

Originally posted by Frosty
Buy some gov bonds, tell congressmen to stop meaningless spending, ask Europe for its unpaid war debts plus interest (i don't care if we told them they didn't have to pay!) and let's move on.

Unpaid war debts?

Who? and how much if you can find out? Would be inetresting to know.

I assume this is US taxpayer money also?

posted on Aug, 21 2005 @ 02:45 AM
The British and Russians never paid back the total amount plus interest from Lend-Lease ($50 billion, $360 billion) during WWII. I'm pretty sure Germany and most of Europe owes us something for the Marshall plan ($13 billion, $100 billion) which put them back on their feet. Bush forgave Iraq's war debt for the most part and refused to accept discounted oil from the Iraqis (spoils of war!). Many of the total war debts from WWI were never paid. This should be our money, in the trillions. But I'd rather just give any one the bird who comes and tries to ask us for our debt payments.

posted on Aug, 24 2005 @ 08:35 PM
Good point, maybe its a jubilee year for the USA?

posted on Jul, 16 2007 @ 05:28 PM
With the potential of having a balanced budget in 2008, can or SHOULD we pay this down? Here is an older thread with a new update added.

The US deficit vs the US dollar

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