That means the U.S. government paid more for interest on its outstanding loans than it paid for defense, or education, or welfare, or medicare, or anything else.
Of course, the U.S. government doesn’t really pay the interest on the national debt. U.S. taxpayers pay it. In 1997, the interest bill alone was more than $2,500 for each and every taxpaying citizen. That is almost $50 per taxpayer per week, just for interest on the federal government’s accumulated debt.
Unfortunately, it wasn’t enough. For the twenty-ninth consecutive year, the U.S. government did not take in enough in taxes to conduct its affairs and pay all of that interest. So again in 1997, the U.S. government had to borrow more money. That is called the deficit. According to the U.S. Bureau of Public Debt, the deficit was only $188 billion in 1997, the lowest figure in many years. (From September 1989 through September 1992, the last Republican administration before President Clinton, the national debt climbed from $2.86 trillion to $4.41 trillion, an average annual deficit of more than $388 billion per year.)
Luckily, the Democrats and the Republicans managed to balance the budget in 1998—or, more accurately, they allowed the strength of the economy to balance the budget without congressional interference. Lest you get too excited, this only means that the annual deficit was eliminated for one consecutive year (although 1999 also looks promising).
However, balancing the budget does not mean that the national debt has been paid back. It’s still there. It’s just not getting bigger anymore. But if the national debt is never paid back, then the interest on the debt will have tobe paid forever. Even for sea turtles, forever is a fairly long time. In fact, unless the U.S. government can find a way to spend less money than it takes in, which means an annual budget surplus, then the interest bill on the national debt will be infinitely large.
For instance, if the national debt stabilizes at 5.5 trillion dollars and the government can continue to borrow money at a steady 6 percent interest, then the interest on the national debt will average around $330,000,000,000 per year. Over the next fifty years, that is a total interest bill of $16.5 trillion, three times the size of the national debt itself. Yet the national debt will remain at a steady $5.5 trillion.
If the national debt remains flat, however, then the amount of money each citizen will have to pay each year will go down. That is because the U.S. population is growing—at a rate of about one person every sixteen seconds (one birth every eight seconds, one death every thirteen seconds, one new immigrant every forty-three seconds, plus adjustments for migration). That is a net increase in population of about 5,400 people per day, or just under two million per year. The U.S. Census Bureau estimates, in fact, that U.S. population will reach 322 million by the year 2020. If the national debt is still $5,540,000,000,000, then the average citizen’s debt load will be about $17,200, a 16 percent improvement over the $20,500 or so that each citizen owes today.
Inflation will also help. At an average of 5 percent inflation, the value of a 1999 dollar will drop to about 34 cents in the year 2020. So the discounted value of each citizen’s national debt load could be as low as $5,850, a whopping 71 percent improvement over the current situation.
That, in fact, appears to be The Plan. On paper it looksworkable. But more things can go wrong. If the national debt increases to ten trillion dollars by the year 2020, which is less than 3 percent annual growth, the average annual interest rate increases to only 8 percent, then the government’s yearly interest bill will jump to about $800,000,000,000. For those of you who find that worrisome, that is only about $2.2 billion per day, including weekends. If it happens, then the nation’s 161 million taxpaying citizens will have to pay an average of $4,969 in
Of course, the U.S. government doesn’t really pay the interest on the national debt. U.S. taxpayers pay it. In 1997, the interest bill alone was more than $2,500 for each and every taxpaying citizen. That is almost $50 per taxpayer per week, just for interest on the federal government’s accumulated debt.
Unfortunately, it wasn’t enough. For the twenty-ninth consecutive year, the U.S. government did not take in enough in taxes to conduct its affairs and pay all of that interest. So again in 1997, the U.S. government had to borrow more money. That is called the deficit. According to the U.S. Bureau of Public Debt, the deficit was only $188 billion in 1997, the lowest figure in many years. (From September 1989 through September 1992, the last Republican administration before President Clinton, the national debt climbed from $2.86 trillion to $4.41 trillion, an average annual deficit of more than $388 billion per year.)
Luckily, the Democrats and the Republicans managed to balance the budget in 1998—or, more accurately, they allowed the strength of the economy to balance the budget without congressional interference. Lest you get too excited, this only means that the annual deficit was eliminated for one consecutive year (although 1999 also looks promising).
However, balancing the budget does not mean that the national debt has been paid back. It’s still there. It’s just not getting bigger anymore. But if the national debt is never paid back, then the interest on the debt will have tobe paid forever. Even for sea turtles, forever is a fairly long time. In fact, unless the U.S. government can find a way to spend less money than it takes in, which means an annual budget surplus, then the interest bill on the national debt will be infinitely large.
For instance, if the national debt stabilizes at 5.5 trillion dollars and the government can continue to borrow money at a steady 6 percent interest, then the interest on the national debt will average around $330,000,000,000 per year. Over the next fifty years, that is a total interest bill of $16.5 trillion, three times the size of the national debt itself. Yet the national debt will remain at a steady $5.5 trillion.
If the national debt remains flat, however, then the amount of money each citizen will have to pay each year will go down. That is because the U.S. population is growing—at a rate of about one person every sixteen seconds (one birth every eight seconds, one death every thirteen seconds, one new immigrant every forty-three seconds, plus adjustments for migration). That is a net increase in population of about 5,400 people per day, or just under two million per year. The U.S. Census Bureau estimates, in fact, that U.S. population will reach 322 million by the year 2020. If the national debt is still $5,540,000,000,000, then the average citizen’s debt load will be about $17,200, a 16 percent improvement over the $20,500 or so that each citizen owes today.
Inflation will also help. At an average of 5 percent inflation, the value of a 1999 dollar will drop to about 34 cents in the year 2020. So the discounted value of each citizen’s national debt load could be as low as $5,850, a whopping 71 percent improvement over the current situation.
That, in fact, appears to be The Plan. On paper it looksworkable. But more things can go wrong. If the national debt increases to ten trillion dollars by the year 2020, which is less than 3 percent annual growth, the average annual interest rate increases to only 8 percent, then the government’s yearly interest bill will jump to about $800,000,000,000. For those of you who find that worrisome, that is only about $2.2 billion per day, including weekends. If it happens, then the nation’s 161 million taxpaying citizens will have to pay an average of $4,969 in
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