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A Look Into the National Debt

Tuesday August 30th, 2011   •   Posted by Stephanie Freedman at 10:18am PDT   •  

John Steele Gordon talks numbers in the Wall Street Journal article “A Short Primer on the National Debt” :

In absolute numbers, the total public debt as of Aug. 11 was $9.924 trillion, and the intra-government debt was $4.666 trillion, for a total of $14.587 trillion. That’s well over 300 million times the country’s median household income. Stacked as dollar bills, it would reach 920,953 miles high, almost four times as far from Earth as the moon.

But while these numbers are fun to play with, they don’t mean much. It’s the debt’s size relative to gross domestic product that matters, just as personal debts must be measured against a person’s income before they can be properly evaluated. The GDP of the United States was $15.003 trillion at the end of the first quarter in 2011. That makes the public debt equal to 66.1% of GDP and the intra-governmental debt 31.1%. Total debt is now 97.2% of GDP and climbing rapidly.

This reminds me of a previous article written by Research Fellow and Director of MyGovCost Emily Skarbek called “Grasping Budget’s Billions and Trillions:Incomprehensibly Huge Numbers Mask Real Burdens” which states:

The spending continues for another important reason, according to what’s known in economics as public choice theory. Most government programs directly benefit distinct groups such as farmers, road engineers, senior citizens, or defense contractors. For these groups, the stakes can be huge, amounting to tens or even hundreds of billions of dollars a year, giving them powerful incentives to fight for that money. But individual taxpayers won’t usually fight for a few dollars, which is what they’ve been told the typical government program costs them…Federal spending is out of control partly because most taxpayers don’t understand how much government really costs them over their lifetimes. And politicians talk only of billions and trillions—abstract numbers that are difficult to comprehend. But those huge numbers do mean something. They mean families must struggle to pay not only their own bills, but also the government’s.

It is initiatives such as MyGovCost that are crucial to ensure Washington knows that we are paying attention and will not stand for anymore of the reckless spending.

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August 2011