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Thursday, July 18, 2024

Government debt reaches record $13 trillion

U.S. Treasury building in Washington (AFP)

US debt has reached 13 trillion dollars for the first time in history, the Treasury Department said Wednesday, stoking a political furor over government spending.

Amid vast government outlays designed to end the economic crisis, the debt reached a record 13,050,826,460,886.97 dollars on June 1, according to official figures.

The debt has increased by around 1.6 trillion dollars in the last year and more than doubled in the last 10 years. It now stands at just under 90 percent of annual gross domestic product.

Against this stark backdrop, tackling debt has become a hot political issue in Washington, with Democrats and Republicans trading barbs about who is to blame.

Earlier on Wednesday President Obama assailed Republicans for leaving him with the type of spiraling short-term deficits that fuel longer-term debt.

The US government suffered its 19th consecutive month of budget deficit in April.

“By the time I took office, we had a one-year deficit of over one trillion dollars and projected deficits of eight trillion dollars over the next decade. Most of this was the result of not paying for two major tax cuts skewed to the wealthy, and a worthy but expensive prescription drug program that wasn’t paid for,” Obama told an audience in Pittsburgh, Pennsylvania.

“I always find it interesting that the same people who participated in these decisions are the ones who now charge our administration with fiscal irresponsibility.

“Despite all their current moralizing about the need to curb spending, this is the same crowd who took the record 237 billion dollar surplus that president Clinton left them and turned it into a record 1.3 trillion dollar deficit.”

But Republicans have lambasted Obama for expanding government spending since he came to office through a massive reform of healthcare.

“Thirteen is certainly an unlucky number, especially for our children and grandchildren who will be left to dig out of trillions of dollars worth of debt,” said Republican Senator Judd Gregg, a frequent critic of Obama’s budget policies.

“This dangerous and unsustainable level of debt cannot continue without bankrupting our country, and I urge the majority to slow its explosion of spending and borrowing before it is too late.”

But economists are sharply divided over how quickly the US should move to rein in spending.

Some believe that a rapid tightening of government expenditure, or an increase in taxes could remove the one support that is keeping the United States from falling deeper into recession.

But as debt-contagion fears grip Europe others have warned that the United States has limited time to forge a credible plan to end its own fiscal woes.

Even the normally cautious Federal Reserve Chairman Ben Bernanke has warned that politically painful tax hikes or spending cuts could be needed to balance the budget.

Obama has launched a bipartisan debt commission to investigate ways of tackling the problem. It is expected to produce its findings by the end of the year.

Copyright © 2010 Agence France Presse

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17 thoughts on “Government debt reaches record $13 trillion”

  1. Almandine

    Thank you for your informative response. Helps those of us who lack “intelligence” and are ” insane fools.”

  2. Well Bogo, they don’t intend to reduce the debt. Instead, while they raise taxes and reduce entitlements, they will either hyperinflate the currency via Federal Reserve manipulation (as they are doing to some degree now), and then prices will follow suit, so as to devalue the relative worth of the dollars to be paid back. OR, they will devalue the currency through sheer govt mandate, again making the relative value of the dollars owed a mere fraction of what they’re supposedly worth today, which is about 5% of what they were worth when the Federal Reserve was formed. Either way, the purchasing power of your dollars sinks lower and lower.

    At some point the US dollar will lose its reserve currency status and we will be fully screwed. It ain’t long in coming, either. 🙁

  3. When you borrow money you gotta pay it back. Right now the government is operating like a giant credit card. Where is Congress in this picture?

    I look right now and see all the various stimulus/job creation bills as nothing more than trickle down without saying trickle down. If you are waiting for any trickle good luck with that. That unemployment rate seems real steady.

    So it seems like the current administration is trying to and has managed – so far – to out debt the previous one? Am I correct on that? How do they intend on reducing debt? Is it though some austerity program? Maybe raise taxes? Reduce entitlements?

  4. A good start would be to stop burying our money and men in the deserts of the Middle East. I doubt anyone in Washington has the guts to suggest that. Instead we’ll see them demand more taxes and shrink benefits at home. Guns and butter? No way Jose! Oh wait, butter for Jose, not for Mr. Smith.

    • According to the Washington Times, the deficit rose from 12 to 13 trillion in merely 197 days (that’s little more than half a year). They also point out that this is only the second fastest trilion dollar increase in history, the first occuring during the 2008 – 2009 bipartisan bailout orgy.

      It’s gotta be done! We need to expand “Republican” militarism while we simultaneously expand “Democrat” socialism. The best of both worlds, I suppose.

      Oh, and don’t forget, we need to shrink the tax base via offshoring at the same time so the privately owned central bank can loan us our own money at interest, driving down its value in the process.

      • No, no, no… the tax base will increase as exponentially as the debt. Just give it a little time. First closing loop holes, then corporate fees (especially oil companies), then the tax cuts expire, then the VAT, then higher income tax rates, then your house, then your first born…

        You get it.

      • Addendum:

        When George Bush the Unfit took office, America had 132.5 million nonfarm jobs. When he left, the nation had 134.3 million, an increase of 1.8 million. With a population increase of one percent per year over eight years the nation should have had an increase of 11 million to 12 million new jobs without an increase in economic productivity or government prodding. So during his two terms, Unfit actually retarded job growth by as much as 10 million. But population growth caused government spending to rise at the same time the Unfit One retarded the ability of government to gain funds necessary to meet national needs, and Griff can’t blame that on Obama. Those jobs aren’t there and the Americans who would have had those jobs aren’t paying taxes.

        Factor in the millions of jobs that were lost in the first year of the Obama administration–all inherited from Unfit’s stupidity–and we see the nation may have as many as 20 million nonexistent jobs. And nonexistent tax receipts.

        Then we have outlays for unnecessary wars and extra costs to government through unemployment benefits, welfare payments, possible expense of added crime all contributing to the deficit that Griff wants to blame on Obama, not on the clown who created the problems.

        If we factor in the lost revenue the right-wing has squandered with unneeded tax cuts for the aristocracy and the corporations and failure to collect what is due from millionaire tax evaders, we arrive at a figure that might equal the deficit. These are the reasons we have a trillion-dollar-plus deficit that can’t be wished away and will be with us for a long time. But Griff wants to blame all that on a president who inherited the problem, not the ones who created it.


        Griff is wrong claiming deficit spending began with Carter. LBJ left a surplus to Nixon, who squandered it by paying for his portion of the Vietnam War with the national credit card.

        And Almandine doesn’t know squat about FDR and the Great Depression. I have done the research, Almandine hasn’t. FDR inherited a GDP of $56 billion in 1933 and increased it to $125.8 billion by 1940. That’s a15.58 percent annual increase, when four percent is considered robust. Unemployment fell from 24.9 percent in 1933 to 9.9 percent in 1940; before the US got involved in WWII. The economy was continuing apace and that apace was monumentally better. Get a clue and do some research; your ideology is easy to disprove.

        • What you fail to cite Thomas is how FDR increased GDP, namely through such humanistic acts as the wholesale destruction of crops and livestock to boost farm prices as “a cleaning up of the wreckage from the old days of unbalanced production” and the slaughtering of 6 million pigs while the common folk were starving. As a result his own Dept of Agriculture declared that the country was not producing enough food to sustain the population at subsistence level. How ’bout that GDP, huh?

          When his “Agricultural Adjustment Act” was taken to the Supreme Court (and found unconstitutional in 1936) his response was “Are we going to take the hands of the federal government completely off any effort to adjust the growing of national crops, and go right straight back to the old principle that every farmer is a lord of his own farm and can do anything he wants, raise anything, any old time, in any quantity, and sell any time he wants?”

          Interestingly, the Department of Agriculture’s Bureau of Agricultural Economics reported that in the case of cotton, farm income would have been at least as high and perhaps even higher in the absence of the AAA, and a respected Cornell economist found that the AAA had been responsible for the joblessness of at least two million workers, especially sharecroppers and other farm laborers.

          FDR’s massive WPA spending projects provided jobs and economic stimulus, but they were rife with corruption, cronyism, and political favoritism, including intimidation of WPA workers to vote Democrat. A large segment of those projects were targeted at western states where his political backing was previously thin. What your statistics fail to state is that essentially all of the increased GDP you cite reflects govt spending, not an expansion of the US economy, per se, not genuine improvement in the US human condition. (Sound familiar today?)

          In fact, the country remained in such dire straits that by the start of WWII he was itching to get involved to crank up the war material production machinery. Thus he orchestrated the Greer incident, in which a German sub was sunk by British torpedo bombers and Greer depth charges, all the while claiming the German sub fired first. Winston Churchill later said the president had made clear at the time that he intended to become increasingly provocative, and that, “everything was to be done to provoke an incident.” Guess things weren’t as good as the numbers suggest, huh?

          In sum, Thomas, FDR was a tyrant. His policies brought suffering to Americans far beyond what they would have experienced, using methods that were cruel, and apparently criminal. Any discussion of his saving this country through those policies fails to state the “opportunity costs” that were built into his schemes, that is, failure to advantage alternative means and methods that were prevented from being emplaced by his schemes, and that could/would have promoted better outcomes had they been in effect. Such as it always is when govt takes the peoples’ property and services and spends them the “proper” way, instead of allowing folks to set their own priorities, manage their own affairs, and establish commerce economically.

          Perhaps for those who wish not to swallow the Keynesian kool-aid regarding the depression, its causes, and the need to bankrupt our country further in this current economic collapse, a couple of good sources would provide enlightenment and educated rebuttal to the foolishness that all that has to be done to eliminate our deficit, pay down our debt, and thereby promote prosperity is for the govt to create more debt and print more fiat money that citizens will be forced to repay. That whole idea is a fool’s promise.

          America’s Great Depression by Murray Rothbard
          The Panic of 1819 by Murray Rothbard
          Meltdown: A Free-Market Look… by Thomas Woods, Jr.

        • “Also, thanks for pointing out that our national debt began under Carter. I didn’t know that, but I’ll take your word for it.”

          It’s called sarcasm.

          I’ve learned not to waste my time arguing with hardcore partisans. I might as well try to convince the Pope that God doesn’t exist.

          But just so I have this straight…When things go bad for a Democrat it’s because of the previous administration, but when things go well it’s due to Democrat genius. Ha.

          Did Bush write this year’s budget?

  5. By the way folks, the national debt when Obama took office was a paltry $10,625,053,544,309.79.

    For all you Democrat apologists out there who constantly rag on Bush for his 5 trillion in 8 years (2 trillion of which was run up during the last two years of his term when the Democrats held the Congress), Obama’s on pace to to double that in half the time.

    Where’s the outrage?

    • Our outrage started when Reagan had half the country believing that his idea of Trickle Down Economics would ever work, and ended when we knew we were beyond hope when Bush Jr came along and tried the same failed stunt again with half the country still foolish enough to believe it would work.

      What’s the point of getting upset any more? If another Democrat like Clinton or Carter came along to balance the budget, idiots would only elect another Repug to start the process of waste again.

      I mean really Griff, if you want to stoke the flames, do a little homework and see which presidents since Carter have been spending the money, and who have not.

      It’s really not worth it to go back any farther than Carter, there really wasn’t ever a national debt before then except for times of war and the depression; both good reasons for it to happen.

      • Aside from being nothing more than a continuation of the Keynesian economic scheme that has been in place since the early 1900’s, made possible by the creation of the Federal Reserve and the graduated income tax, what would you call Obama’s economic plans?

        Also, thanks for pointing out that our national debt began under Carter. I didn’t know that, but I’ll take your word for it.

        I find it amusing that the supposed “intelligent debate” in modern economics revolves around two presidents long gone. The Republicans have their “standard-bearer” in Reagan and the Democrats in Carter.

        Absolutely nothing has happened since 1988.

        The year was 1913.

    • Get a grip Griff:

      There is no “outrage” because intelligent people know that you can’t spin on a dime and undo three decades of right-wing stupidity overnight.

      Intelligent people also know that there is a carryover from one administration to another and Obama “inherited” Bush the Unfit’s budget deficit, with only a few alterations of his own.

      Intelligent people know it took four years for Clinton to balance the budget after inheriting $290-billion deficit from Bush the Daddy.

      Intelligent people know in took FDR all his administration just to address the problems created by Harding, Coolidge and Hoover.

      This idiot idea that a new administration can erase a trillion-dollar-plus inheritance immediately is insane.

      Just reducing government spending to address the deficit is also insane. Hoover cut spending in 1932 to address the deepening depression and the depression got worse (That cut came in fiscal year 1932 which began in the summer of 1931). Even though the economy was making a comeback, FDR relented to right-wing hysteria and reduced government spending in 1937 and the recover headed south. It wasn’t until 1939 and returning to his successful program that FDR got the GDP back up to 1937 levels and wasn’t until 1940 that unemployment figures matched 1937 rates. With the collapse of the USSR, Bush the Daddy’s administration devised a plan to reduce defense spending by tens of billions of dollars. Remember the “peace dividend?” That resulted in a nationwide recession becoming a depression in California that had been receiving much of the defense budget.

      Only an insane fool would think that cutting spending to address the problem would do as promised after these three monumental failures.

      Intelligent people are “outraged” that there still are people so deluded that they think such actions would work miracles when such actions have always been monumental failures.

      Just be thankful that Obama apparently prevented Bush the Unfit’s economy from becoming another Great Depression with his minor alterations to Unfit’s budget.

      PS to Mightmo: This nation has had a deficit throughout its history except for two years during the Jackson administration. Economic historians say that wasn’t a good period. But there have been many years where there hasn’t been a deficit, and those times were pretty good.

      • Don’t even think that FDR is responsible for ending the depression. Without WWII things would have continued apace. And don’t give credit to Obummer and his continuance of the current morass for “saving the economy”.

        Intelligent people, my arse.

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