Debt+and+the+Future



The national debt accumulated in the United States continues to be a huge crisis. As of April 30, 2009, the national debt was at $11,238,592,141,958.64. [|Source]Debt has always been a big factor of U.S. history. The first dramatic debt occurred because of Civil War. The debt was only $65 million in 1860, but passed $1 billion in 1863 and had reached $2.7 billion following the war. The debt slowly changed 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 from $51 billion in 1940 to $260 billion following the war. Following this, the debt's growth closely matched the rate of inflation until the 1980s, when it again began to increase. During the years of 1980 and 1990, the debt tripled in amount. The public debt decreased from FY 1998 until FY 2002 on a nominal dollar basis, although the total debt has not declined since FY 1969. By the end of 2005, the gross debt had reached $7.9 trillion, about 9 times the debt amounted in the 1980s. [|Source]
 * __Background of our Debt:__**

Congress has the power to tax. They also have the power to spend the nations money. The nation's debt is not entirely caused from Congress, however they are the primary source spending our money. Congress has the power to borrow. Article I, Section 8, Clause 2 allows Congress “to borrow Money on the credit of the United States.” There is no limit on the amount they can borrow or for what purpose. Deficit spending is a practice of funding government by borrowing to make up the difference between government spending and revenue. Congress relied on this to get through the Depression, World War II and many other wars and social programs in future decades. From 1969 to 1998 there were no surpluses in the government books. This resulted in the public debt to rise year to year. Public Debt is all of the money borrowed by the government not yet repaid, plus the accumulated interest on the money. In 2002 Congress abandoned deficit financing. Since Congress has the power to borrow money makes it a national function. The interest the Federal Government pays to those who loan it money cannot be taxed by the Stares. In the future, Congress will continue to borrow, in the form of bonds and securities issued by the Treasury Department, to service the public debt.
 * __Congress's Role__**

Just who gives us all this money? The money is borrowed from buyers of Treasury securities -- which are basically a big batch of IOUs that are auctioned off every three months. As the auction date approaches, the Treasury figures out how much it will need to pay off old debt and cover the government’s latest round of overspending. When the auction day comes, buyers submit bids in the form of the interest rate they’re willing to accept. You can choose to make a competitive bid (you ask for a specific rate) or a non-competitive bid (you agree to accept the average rate of other winning bids.) When all the bids are in, the Treasury starts at the bottom, taking the lowest bids until it has collected enough money to cover that round of borrowing. The money flows in from all over the place: from individual investors and corporations, pension funds and governments, both in the U.S. and around the world. Basically, anyone with a large amount of cash looking for a safe place to put it is a good candidate for holding U.S. Treasury debt. So just who are these lenders? As of last June (the latest [|complete breakdown] available), the biggest holder of Treasury debt was the U.S. government itself, with about 52 percent of the total $8.5 trillion in paper that's out there. Most of the government’s holdings are massive savings accounts for programs like Social Security and Medicare. Just as you may prefer to keep your Individual Retirement Account in the safe Treasury bonds, the folks who manage the Social Security Trust Fund are looking for a secure investment, too. That’s leaves a little over $4 trillion in public hands. The biggest chunk (about 25 percent of the $8.5 trillion total) is held by [|foreign governments]. Japan tops the list (with $644 billion), followed by China ($350 billion), United Kingdom ($239 billion) and oil exporting countries ($100 billion). [|Source]
 * __Where Our Debt Came From:__**

If you spend more money then you make in one month you would be in a situation known as budget deficit. The amount you borrowed is called your debt. You have to pay interest on your debt. If next month you don't have enough money to cover your spending, you must borrow some more, and you'll still have to pay the interest on the loan. If you have a deficit every month, you will have to keep borrowing money to keep up and your debt will end up growing. Soon your interest payment will become so large it will be bigger then any other payment. Eventually, all you can do is pay the interest payment, and you don't have any money left over for anything else. Each year since 1969, Congress has spent more money than its income. There is a huge amount of money that the US has currently borrowed more than $11,000,000,000,000 and growing.We pay interest on that huge debt, and now the Treasury is having a hard time finding people that will lend them money. [|Source]
 * __Debt and the Future:__**

Everything we have now is the result of those who came before us. Our future and those who come after us will need the same things we have found here. Too often our commitments dictate how many tax dollars will be left for future generations to respond to their changing needs. The public has grown accustomed to the best in protection, library services, and parks, without paying the actual costs of such services. Optimism may be the force in this practice. With optimism in the future, the economy will turn around. It believes that we'll develop better, cheaper ways to provide necessary services.

media type="custom" key="3737097" During this speech President Obama talks and discuses with several people about if he is putting our nation in more debt or, in fact, helping our country by his plans in the near future. Our president is questioned about his plan with the government money and he explains how his plan will affect the economy in a positive way. President Obama believes his budget will benefit everyone because he is reducing the un-needed programs in education, medicare, medicade, and other healthcares. He believes he will reduce the debt of 9.3 trillion dollars in half within the next three to four years by elimating the programs. However, he mentions the nation will always have a debt in areas like the investments in science and technology. President Obama says that if we "grow as a community" it will provide us with sucess in reducing the debt within the nation.

[|U.S. National Debt]

Look at the increase in debt starting in 1942.Our GDP and debt as a result is generally increasing. This graph shows how in the future our debt is predicted to continue rising. That amount equals to $10 trillion today. [|Source]

 This picture applies to our topic because it shows how our debt accumulated now will still affect our future. [|Source]