On September 30, 1987 – near the end of the Reagan Administration – total federal debt stood at $2.3 trillion. Our federal government took 200 years to incur $2.3 trillion dollars worth of debt. In the 2011 debt ceiling increase, Congress gave the President approval to increase the debt ceiling by $2.1 trillion. I voted against that measure, but the federal government will use up that $2.1 trillion increase around Christmas of 2012. We will have gone through $2.1 trillion worth of debt in less than two years. It took 200 years to incur $2.3 trillion of debt, and we will incur $2.1 trillion dollars more in less than two years.
When President Obama came into office the national debt stood at $10.6 trillion. It recently surpassed $16 trillion, which is larger than the size of our economy - an extremely dangerous metric.
Here’s one way to think about this: If a family’s debt exceeds total income on an annual basis, and the family doesn’t have the assets to back it up – if they’re in debt over their head - how can they grow their "personal economy"? Every dollar beyond the basics goes towards paying off the debt.
The same thing is true for federal economy. It’s the same dynamic, on a massively larger scale. History tells us when that debt to GDP ratio exceeds 90 percent - and we’re over 100 percent - it harms the economy’s ability to grow out of that debt. President Obama’s budget estimates that our federal debt will grow to $26 trillion. I don’t think it will get to that point because I don’t think we’ll find creditors around the world that would loan us that money.
Video courtesy of Chippewa Valley Community Television.The data used in the preparation of this chart can be viewed here.