Why the US is in so much Debt.

[Mormolyce]

So alexander did help us lower our our debt but another war broke. the war of 1812. You all know or should know but basically The War of 1812 was a 32-month military conflict between the United States and the British Empire and their Indian allies which resulted in no territorial change between the Empire and the USA, but a resolution of many issues which remained from the American War of Independence. The United States declared war in 1812 for several reasons, including trade restrictions brought about by Britain's ongoing war with France, the impressment of American merchant sailors into the Royal Navy, British support of American Indian tribes against American expansion, outrage over insults to national honor after humiliations on the high seas, and possible American interest in annexing Canada. That soon cost alot more debt that we did not need and more and more wars started to broke out. Then the 1900s hit. And from there the debt started to grow on and on more and more soon we were in 7 trillion dollars in debt.

Okay but... a lot happened between 1810 and 2013. To the point that what happened in 1810 has long since ceased to be relevant. I mean, I assume you're talking about national debt here right? As in the government debt? Here's a graph:



The site looks either partisan or just bonkers but the graph seems fine. I'd say that looking at anything pre-WWII at the earliest is a waste of time. Recent trends in the deficit seem to have started around the Reagan era.

---------- Post added 2013-03-22 at 01:30 AM ----------

From what my partner tells me from his econ classes, there is nothing wrong with having debt, so long as the United States is able to remain productive enough to meet the debt obligations. When we should start worrying is when we're no longer able to make our payments.

The key thing is the budget deficit - ie whether the government is making a surplus so it can pay down its debt or a deficit so it contributes to it. Same as making your credit card payments really. Last time the budget was in surplus was under Clinton:



Again, sorry that the site is partisan.

[Lolmoney]

From what my partner tells me from his econ classes, there is nothing wrong with having debt, so long as the United States is able to remain productive enough to meet the debt obligations. When we should start worrying is when we're no longer able to make our payments.

When it comes to something as vastly complex as economics, I would not pay too much attention to what someone has to say just because they've taken an econ course. I know that sounds stupid coming from some randy on the internet, but its worth mentioning.

Anyway, debt is not an issue, nor are trade deficits, depending on what model of economic theory you follow. There were actual real fears regarding the future of the American economy when the country had no sovereign debt briefly under the Jackson administration.

Also, don't ever listen to anyone who complains about "China owning American debt." It's almost a non-issue, as Japan holds almost as much American debt as China does, all the while something like 70% of all outstanding debt is owned by the American people, not scary, foreign investors.

Oh, and just because someone holds American debt in the form of bonds does not mean they can just randomly call in the debt. Does not work that way, although stupid people would have you believe it does.

[Evil Inside]

The wars, and the massive military spending budget might have to do something with it I think.

[obdigore]

Because politicians promise things that will get them elected, then when they try to put those things into effect they end up being amazingly cost prohibitive, while those same politicians lower taxes.

US Foreign policy since WW2 certainly hasn't helped either, nor has the effectual corporate welfare that the DoD gives to quite a few businesses in the mid east coast and in Washington.

We could talk about McCarthyism and why socialism is a bad word while the US government rightly enacts more socialist policies, but they have to do retarded handwaving and stupid shit like forcing everyone to buy medical insurance instead of just providing medical care at great rates, because of McCarthyism.

We could talk about how Congress puts together the budget and the whole 'if I don't spend it this year, I wont get as much next year and I might need it' mentality that has been created by this.

We could talk about contractors who start spiking the price of government contracts once they are halfway through, and since the government refuses to cut funding to programs because they have to show something for it, they just throw more money at the contractors until the program is done.

We could talk about supply side economics that are, quite frankly, retarded. The 'my taxes are too high' crowd don't even know what high taxes are and because, for some dumbass reason, people vote for a group that promises that if they lower taxes on businesses and the rich, then those same businesses are just going to magically make jobs for shits and giggles.

We could talk about the anti-science and anti-learning bent in Society and the complete refusal to understand that unless we wish third world living conditions, we must be able to do things that third world countries cant do, such as more technical and education required positions.

American Exceptionalism is a cool concept, but when you throw out what other places do better than the US solely because it 'isn't American', you have some pretty bad blinders on. Nations can and learn from the experience of others, I'm not sure why this is such a horrible sticking point for politicians in the US.

So... what do you all want to discuss?

[oblivionx]

Again, sorry that the site is partisan.

Partisan is one thing, massive distortions is another.

[PizzaSHARK]

The wars have total real costs in the $4 trillion vicinity. The gigantic recession cost something in the vicinity of another $3 trillion to lost revenue and bailouts. Take those away, and our debt would be at entirely sustainable levels.

There's no need for lengthy explanations to this to have a basic understanding.

How much of these debts are "real" though? Isn't it all basically done on credit to the point that everyone is up to their eyeballs in debt with everyone else? What would happen if we just wiped the slate clean and said all past debts are forgiven, worldwide, for all countries? Would it actually change anything?

[Deleted]

I heard some people say that war costs alot of money... It doesnt have to.

The US became rich because of world war two. Their economy was blooming because of it, and they only lost 0,6% of their population.

[obdigore]

I heard some people say that war costs alot of money... It doesnt have to.

The US became rich because of world war two. Their economy was blooming because of it, and they only lost 0,6% of their population.

It wasn't how 'good' the American economy was, it was really the only undamaged manufacturing base in the world after WW2. Up to that point Europe had been a manufacturing powerhouse and after the tactics used there wasn't really a huge manufacturing base there any longer.

[Ryuukon]

Nation building and sending money to so many countries that are perceived as "impoverished".

The USA wouldn't be in so much debt if the UN and the rest of the world ponied up. But that's never going to happen as long as the bleeding hearts here think "Oh my! There's a child starving to death in [insert random country]".

Yet the status of the rest of the world falls on the average American. Everyone else now has the comfort of saying "Well, the Americans will take care of it", while we Americans are simply asking "Why is it always us that tries to stop global hunger and famine."

As far as I'm concerned, the UN has failed, and in a spectacular manor. Every time a crisis comes up, it's not the UN people turn to, it's the USA. Thus the UN is a joke. Then the American people are expected to foot the bill.

Don't expect it to last much longer since our debt is multitudes higher than any other country in the world.

And that being said, I would LOVE it if America took on an isolationist stance. At least then the world would face actual growth instead of relying on handouts.

[Boogieknight]

You forgot to mention our debt going from $997 billion to $2.85 trillion in the duration of the Reagan years due to his increased spending in defense along with repercussions of Reaganomics. Since then it's just been repetition of the actions that started that big jump and fixing the issues it caused. As someone else said the real reason of any debt is spending more than you take in.

[Elegiac]

And that being said, I would LOVE it if America took on an isolationist stance. At least then the world would face actual growth instead of relying on handouts.

Typical, coming from a scion of a country that has never had to deal with competitors on its own soil.

[SodiumChloride]

Not a big deal really.

If the US doesn't pay, what is the world going to do? Go to war with a nuclear power with enough nukes to destroy the world 5x over? The worse that can happen is the world refuses to trade with the US.

It really isn't a problem for the US.

As the old saying goes, "If you own the bank $6000 dollars and can't pay, you have a problem. If you own the bank $6 billion and can't pay, the bank has a problem."

[PizzaSHARK]

Typical, coming from a scion of a country that has never had to deal with competitors on its own soil.

Competitors in what sense?

[Daelak]

Not a big deal really.

If the US doesn't pay, what is the world going to do? Go to war with a nuclear power with enough nukes to destroy the world 5x over? The worse that can happen is the world refuses to trade with the US.

It really isn't a problem for the US.

As the old saying goes, "If you own the bank $6000 dollars and can't pay, you have a problem. If you own the bank $6 billion and can't pay, the bank has a problem."

This post is the entire crux of the answer to the fake-theories of libertarians and conservatives.

We are the largest economy and the largest tax-base in the world. We produce and consume more than any other nation on Earth.

This is why foreign investors will continue to purchase our debt for decades to come, because if we fail as a country, then the entire world economy comes crashing down.

Foreign investors, as well as economists around the globe are waiting for the US to re-build its country to prominence once again with a 10+ trillion dollar 21st century infrastructure upgrade for the next generation of products, energy, and lifestyles. But there is one problem, and it is the intransigent conservative republicans who would rather let this country fail than to see their ideology being swept into the dustbin of history. They are bringing us to our knees.

[Kujako]

As the old saying goes, "If you own the bank $6000 dollars and can't pay, you have a problem. If you own the bank $6 billion and can't pay, the bank has a problem."

But we're in no danger of not paying (unless the Republicans block the debt ceiling... again.), the ratio of our debt to our GDP is fine. It's just a big scary number. In my opinion, we should be borrowing more money right now as it is never going to be less expensive to do so and the funds could generate more then the cost by expanding our infrastructure, education, etc to grow the GDP.

[Reeve]

You're missing some important points. One is that Hamilton supported the idea of maintaining a Federal Debt at all times in order to establish ongoing credit-worthiness.

[Wildtree]

The answer to the USA's debt seems to be pretty obvious....
Reuters is definitely a trustworthy news source, globally... Here's where the USA's money went..
http://www.reuters.com/article/2013/...92D0PG20130314

[willtron]

Only if you promise to strip me of my citizenship and kill me and my family.

lol'd

probably shouldn't.

[petej0]

Why is the US in so much debt? Because they pass spending bills like Hurricane Sandy Relief bills that include millions for fishing in Alaska and the Gulf.

Oh and BTW anyone who says Clinton had a surplus needs to look at the US National debt on http://www.treasurydirect.gov and find the year(s) in which our national debt DECREASED. If it did not DECREASE there was no surplus. It is basic math.

[Wildtree]

Why is the US in so much debt? Because they pass spending bills like Hurricane Sandy Relief bills that include millions for fishing in Alaska and the Gulf.

Oh and BTW anyone who says Clinton had a surplus needs to look at the US National debt on IRS.gov and find the year(s) in which our national debt DECREASED. If it did not DECREASE there was no surplus. It is basic math.

You need to learn the difference between debt and budget surplus.