Is the National Debt Bad?
I was watching Schoolhouse Rock videos on YouTube when I came across the following:
That made me very curious. The debt was born in 1780, and has never been paid off? Hamilton wanted the debt as a reason to establish taxes?
Someone commented on the video saying that Bill Clinton paid off the national debt. Another person properly replied that was wrong, that was only the budget, and Clinton didn’t even touch the debt.
Is the debt bad? I looked it up on Wikipedia. Currently, the national debt is about $9.5 trillion, or $31,100 per U.S. resident. If unfunded Medicaid, Social Security, etc. promises are added, the figure rises to $59.1 trillion. That means Medicaid, Social Security, etc. will cost about 5.2 times the amount of our current national debt. When put in that perspective, the $9.5 trillion isn’t bad at all. Medicaid, Social Security, etc. are a far bigger problem.
According to the The CIA World Factbook, the following countries have a higher national debt than the United States, as a percentage of GDP… personally, I was really surprised by this:
Japan, Zimbabwe, Lebanon, Seychelles, Jamaica, Italy, Egypt, Singapore, Sudan, Belgium, Sri Lanka, Israel, Greece, Bhutan, Cote d’Ivoire, Hungary, Jordan, Uruguay, France, Portugal, Germany, Canada, Morocco, Cyprus, Austria, Mauritius, Philippines, Argentina, India, Turkey, Nicaragua, Ethiopia, Tunisia, Colombia, Pakistan, Albania, Panama, Kenya, Switzerland, Ghana, Netherlands, Costa Rica, Aruba, Bolivia, Croatia, Poland, Brazil, Papua New Guinea, United Kingdom, Vietnam, Malawi, Sweden, Malaysia, Dominican Republic, Norway, Bosnia and Herzegovina, Montenegro, Bangladesh, Babon, El Salvador, Syria, Thailand, Cuba, and Serbia.
If you look at this way, the U.S. national debt isn’t bad at all. (Although there is also a large number of countries with smaller national debts, too.)
Let’s look at #1 on the list, Japan. It’s a country that most Americans today have a lot of respect for. I think their economy is quite good. I didn’t know they had a particularly high national debt. But they do, especially as a percentage of GDP. In absolute terms, it’s only a little less than the U.S. national debt. Apparently, Brazil’s national debt is the highest in absolute terms. So I guess our national debt is not too bad after all.
Here’s the transcript of the video:
TOUR GUIDE: To your left, folks, is the Washington Monument, to your right, the White House. And over there, just beyond the Capitol, is the National Debt!
TOURISTS: Oooo! Wow!
There’s something huge
Red, white, and blue
That’s grazing in D.C.
It’s gobbling up the taxes
That are paid by you and me
It doesn’t seem to notice
We really can’t afford
The billions that it’s costing us
To pay its room and board
It doesn’t roam
But seems content
To dwell on Capitol Hill
As long as trucks keep pulling up
With tons of green-back bills
We’ve got to feed the big guy
We really can’t forget
It has an awesome appetite
TOUR GUIDE: The debt was born in 1790 when our new government took over 75 million the colonies spent in the Revolutionary War.
We’ve got to feed the monster
So it doesn’t get upset
It’s got an awesome appetite
TOUR GUIDE: Alexander Hamilton, our first Secretary of the Treasury (he’s on the 10, you know), wanted a federal debt to provide a reason to establish taxes to support our new nation.
The debt was young, they kept it small
They didn’t know back then
In 1812 another war would make it grow again
By ’66 the Civil War had cost the nation millions
The government in Washington now had a debt of billions
TOUR GUIDE: The Civil War ran up a debt of almost three billion dollars that still wasn’t paid off by World War One.
We’re spending money we don’t have
Or so it would appear
The deficit is that amount we overspend each year
Though congressmen and senators
Make vows to cut its size
Despite their honest efforts
The debt just seems to rise
TOUR GUIDE: Now the debt’s over 4 trillion dollars and still growing…
A balanced budget would be great
To spend within our means
To stop the monster in its tracks
Before we bust our seams
It feeds on just the interest
Its appetite is whet
It never, ever stops to rest
TOUR GUIDE: And this is the U.S. Treasury. It sells Treasury Bonds, bills, and notes, and savings bonds to finance the debt. The U.S. government promises to pay the owner interest plus the value of each bond at a future date.
We’ve got to try to tame the debt
And bring it down to size
To let it grow unchecked like this
Is certainly unwise
The debt’s a monster problem
That we really can’t ignore
I guess we should be grateful
That it’s not a carnivore
We’ve got to keep on servicing
Our trillion dollar pet
It’s got a monster appetite
A fiscal misadventure
With trillion dollar dentures
TOUR GUIDE: Feeding time is ALL the time.