The U.S. Treasury Department says the national debt has topped $16 trillion, the result of chronic government deficits that have poured more than $50,000 worth of red ink onto federal ledgers for every man, woman and child in the United States.
The U.S. Treasury Department reported Tuesday that the national debt had topped $16 trillion as the Democratic National Convention gets underway.
Currently China and Japan hold the largest United States debt at $1.16 trillion and $1.12 trillion, respectively. Brazil, Russia, Switzerland, Taiwan, and the United Kingdom are also at the top of the list of U.S. debt holders.
Sharp increases in debt have occurred during the Civil War, during World War I, during The Great Depression, and during World War II.
Recently, tax revenues have declined significantly due to a severe recession and tax policy choices, while expenditures have expanded for wars, unemployment insurance and other safety net spending.
The last balanced budget for the U.S. was in 2001 under President George W. Bush. Spending increased from 18.2% GDP in 2001 to 23.8% GDP in 2010 — an increase of 5.6% GDP. During the same period, revenues declined from 19.5% GDP to 14.9% GDP — a decline of 4.6%. After a surplus with President Bill Clinton in 2000, the 2010 situation presented a 9.4% deficit.
The cause of the surplus-to-deficit reversal according to liberal Economist Paul Krugman is attributed to three factors:
Bush tax cuts
Wars in Iraq and Afghanistan
The Great Recession with associated revenue collapse and spending in unemployment insurance and other safety-net programs.
The CBO reported in September 2011 that because of the aging of the population and rising costs for health care, attaining a sustainable federal budget will require the United States to deviate from the policies of the past 40 years in at least one of the following ways:
Raise federal revenues significantly above their average share of GDP
Initiate major changes to the benefits provided for Americans when they become older
Substantially reduce the role of the rest of the federal government relative to the size of the economy.
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