Why do people panic over the size of the US national debt...and the debt/person?

Question

The numbers:

Total US debt: $8.487 trillion
Total US Population: 300 million
Total US GDP: $11.75 trillion
Total Federal Receipts (how much is collected): $2.145 trillion
Interest on Federal Debt: $184 billion

Therefore, the average per person numbers look like this:
Total debt: $28,000
Total receipts: $7,180
Total Interest: $613

So, lets get this straight. This is the equivalent to having a loan for $28,000, having an income of $7,180, and paying annual interest only of $613 (2%). Considering the average GDP growth is 3-4%, why would this situation be scary for anyone? Seems like people borrow money for their homes at much higher interest rates at more than 4 times their income without giving it a second thought.

The reality is the US spends more than they take in, meaning they have to constantly borrow, so as the GDP grows, so does the debt. But the current debt is far from overwhelming.

In light of these plain facts, explain why you think its concerning.

Some good answers so far but I wanted to add a couple comments.

As far as the house analogy, the point was merely to address the sheer size of the debt relative to the total income the US brings in taxes is not as troublesome as it might seem.

It seems far too often people hear the trillion dollar number and panic, but spread out its not as ridiculous as it would seem especially when you consider that size of the GDP.

Sure, spending more than is brought in every year is a disgrace, and both major parties should be ashamed, and THAT should be the most concerning, but not the size of the current debt. With proper fiscal policy (which neither party has) the debt could be addressed very easily.

It just so happens that the right believes that it doesn't matter because the economy will out pace spending eventually, and the left can't seem to stop finding more ways to spend every penny available. Shame on both parties.

As far as the percentage of spending on interest, the number is actually close to 9% which can be verified by searching the US Federal budget. While this does seem poor, consider that you are paying interest on this debt at a rate not far from the growth rate of the GDP. So, if congress could actually put together a budget without a deficit every year, over time, the growth of the economy would wipe out the debt on its own. Yet again, the REAL problem is not the debt itself, its that Congress cannot balance a budget.

Answer 1

The numbers actually looked worse in the early '80. But remember inflation?

As the national debt increases, the government prints more money and pays back the loans in deflated dollars. Great why do to things.

So as the debt increases the government is applying a hidden tax in the form of inflation, which takes away our spending power. As this happens businesses become more Conservative and the whole economy slows. Which causes the government to keep printing money and increase inflation. And then thinks can get out of hand.

But as one person answered the question before, I'm not the one that acting irresponsible, but I have to pay. That's not fair I'd say. The government is stilling my spending power. In fact the more responsible I act the more it costs me. That's crazy.

Jim

Answer 2

First, I'd have to say that having a debt that's four times your annual income is pretty darn bad. The house analogy doesn't really apply, because a house is not only debt, but an asset that generally offsets that debt as well.

But additionally, people get uptight about it because about 12% of U.S. discretionary spending is taken up by interest payments on that debt. This is the second largest item in the discretionary budget (behind only the military), and is much larger than all those programs like AFDC and so forth that people (incorrectly) term welfare, and something like 15 times as large as the entire foreign aid budget of our nation (that also tends to rile people).

Answer 3

Sorry, I do not think you home mortgage analogy is appropriate here. When you pay your mortgage every month, you are also paying down a portion of principal (this is how it works for most people, I realize interest-only mortgages are becoming more popular). As you said, the US debt does nothing but increase.

A better analogy is paying the minimum on a credit card while charging more so the outstanding principal balance grows every month. One way or another this just cannot go on forever.

Answer 4

Well, since I dind't personally rack up said debt--why the hell should I have to pay for it? The government overspends all the time--and the amount of money we are spending on the military is out of control. Without even putting the war into the equation--the government wastes so much money ---pork barrel spending. They don't care. That is what makes me angry. Their rogue spending ways and ridiculous projects they pay for are out of control and it is on the backs of working Americans to fund it. That's wrong. I have no problem paying off a $28,000 debt when I'm the one in control of how that money was spent in the first place.

Answer 5

because the only reason that the debt is supported is because china buys billions of us bonds. if/when they stop buying so much, it would be a catastrophe for us. and also i don't think that it is a good idea to give the chinese so much power over OUR economy. it seems to me like we don't need to run a eficit to have a healthy economy. and in general, it is pretty hypocritical for the govenrment to run up a huge deficit, but get all preachy about people managing their finances carefully.

Answer 6

Its because of industrial advantage in the fields of technology and computers