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The national debt is at $15.8 trillion dollars. It is roughly 7 times that amount when the unfunded liabilities of Social Security, Medicare, and Medicaid are factored in. These numbers are so large that it is often difficult to grasp. Thankfully, Mike Kane has written a guest post over at the Coalition to Reduce Spending to put the national debt into perspective.
The entire Coalition to Reduce Spending website is worth checking out: http://reducespending.org
1. Federal spending is at an all-time record high – $3.796 trillion in Fiscal Year 2012.
2. The deficit in FY 2012 totals over $1.327 trillion dollars.
3. In other words, the United States spends over $3.92 billion everyday that it doesn’t have.
1. Think of all the people you know. Each one of them — your family, your friends, and the strangers you pass on the street — contributes $14 dollars per person per day to the national debt.
2. Annually, you contribute over $5,000 per year. Note, though, that this is per person, not per taxpayer. If we annualize each taxpayer’s debt, this figure jumps to roughly $13,783.
3. With a national debt of over $15.811 trillion dollars, every man, woman and child currently owes over $51,000 for their share of the U.S. public debt.
Your Share, in perspective
1. Last year, the The U.S. debt to GDP ratio was 102.93%. I would take roughly every dollar of value we create in a year to fully pay off our entire debt.
2. The average pre-tax per capita income in 2011 was $41,663. That means that, before taxes, each American is indebted for at least one year just to pay their contribution.
3. Considering current inflation rates, tax rates, levies and duties, etc.; the actual period of indebtedness is closer to around two and a half years.
Interest Compounds the Problem
1. A startling 9% of all federal receipts pay just the interest on the debt, and does not even pay down a dime of principal. Interest payments for FY2012 so far total almost $272 billion.
2. That means that every taxpayer already has paid over $1,178 this year simply to service the debt. ($13,097 x .09 = $1,178 dollars).
3. Our interest payments are down from $454 billion in 2011, in part because we’re only halfway through the year, and because interest rates are slightly lower than last year.
1. Looking forward to 2016, the U.S. debt is projected to approach $23 trillion.
2. If interest rates were just to rise to historical norms of about 6-7 percent, interest payments would climb to nearly half of all federal receipts.
3. In a somewhat unlikely, but not implausible early 1980s-like scenario, interest rates of 10% would cause interest payments to climb to an astronomical 95% of all federal receipts.