US Public Debt Surges Past $12.5 Trillion
With the federal debt limit recently being raised to $14.3 trillion, the amount of US public debt has started to surge higher.
On March 1st, 2010, the US public debt total surged past $12.5 trillion for the first time ever. With the United States expected to post a deficit of approximately $1.35 trillion in 2010, we should see a clean break of the $13 trillion mark fairly shortly.
Of the $12,507,536,462,861.04 that the United States currently owes, over $8 trillion of this is "debt held by the public", while the remainder is "intragovernmental holdings". "Debt held by the public" is money that is owed to hedge funds, pension funds, individual investors, foreign governments, etc., while "intragovernmental holdings" is money that the government owes to itself. For instance, the US government has borrowed heavily from the Social Security fund over the past number of years in order to finance their deficit spending, and this money must be paid back.
The US federal debt has roughly doubled since September of 2002. On September 30th, 2002, the United States had a total debt outstanding of approximately $6.2 trillion, meaning that the nation's debt load has doubled in less than 8 years. That's pretty scary.
Another eye-opening figure for you - the US public debt load topped $1 trillion for the very first time in late 1981. So, that means that the US debt load will have increased from $1 trillion (late 1981) to $14.3 trillion (late 2010) in just 29 years.
The unfortunate part of carrying a debt load this massive is that you have to pay interest. The interest costs aren't unbearably high now (what's a few hundred billion), but in a decade, net interest expenses for the federal government are going to be approaching the $1 trillion mark, according to the CBO (Congressional Budget Office). If that doesn't stop you in your tracks, then I don't know what will.
Why the massive surge in the US debt load over the past 8 years?
There are a number of reasons, including:
1. The near implosion of the financial sector in late 2008. The United States government committed an unprecedented amount of money towards keeping the financial sector (and by extension, the US economy AND the global economy) afloat. This wasn't cheap.
2. Two recessions (post 9/11 and the "Great Recession") that dramatically ate into personal and corporate tax receipts.
3. Two expensive wars (Iraq and Afghanistan).
4. The implosion of the real estate market (this ties in with #1, as the US government committed unbelievable amounts of money to try and stabilize the US housing market).
5. Various tax cuts and stimulus spending packages.
The bottom line - spending has spiraled out of control over the past decade or so, and there are no signs that this trend will be reversing itself anytime soon.
Estimates have the national debt at around $20 trillion by 2020 or so, so strap yourselves in - it's going to be a bumpy ride.
Source: TreasuryDirect.gov - Historical Debt Outstanding
Filed under: The Economic Meltdown