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The national debt of the United States is the total national debt owed by the federal government of the United States to Treasury security holders. The national debt at any point in time is the face value of the then-outstanding Treasury securities that have been issued by the Treasury and other federal agencies. The terms "national deficit" and "national surplus" usually refer to the federal government budget balance from year to year, not the cumulative amount of debt. In a deficit year the national debt increases as the government needs to borrow funds to finance the deficit, while in a surplus year the debt decreases as more money is received than spent, enabling the government to reduce the debt by buying back some Treasury securities. In general, government debt increases as a result of government spending and decreases from tax or other receipts, both of which fluctuate during the course of a fiscal year. There are two components of gross national debt:
A balanced budget amendment is a constitutional rule requiring that a state cannot spend more than its income. It requires a balance between the projected receipts and expenditures of the government.
Fiscal policy is any changes the government makes to the national budget to influence a nation's economy. "An essential purpose of this Financial Report is to help American citizens understand the current fiscal policy and the importance and magnitude of policy reforms essential to make it sustainable. A sustainable fiscal policy is explained as the debt held by the public to Gross Domestic Product which is either stable or declining over the long term". The approach to economic policy in the United States was rather laissez-faire until the Great Depression. The government tried to stay away from economic matters as much as possible and hoped that a balanced budget would be maintained. Prior to the Great Depression, the economy did have economic downturns and some were quite severe. However, the economy tended to self-correct so the laissez faire approach to the economy tended to work.
The United States federal budget comprises the spending and revenues of the U.S. federal government. The budget is the financial representation of the priorities of the government, reflecting historical debates and competing economic philosophies. The government primarily spends on healthcare, retirement, and defense programs. The non-partisan Congressional Budget Office provides extensive analysis of the budget and its economic effects. It has reported that large budget deficits over the next 30 years are projected to drive federal debt held by the public to unprecedented levels—from 98 percent of gross domestic product (GDP) in 2020 to 195 percent by 2050.
The history of the United States public debt started with federal government debt incurred during the American Revolutionary War by the first U.S treasurer, Michael Hillegas, after the country's formation in 1776. The United States has continuously had a fluctuating public debt since then, except for about a year during 1835–1836. To allow comparisons over the years, public debt is often expressed as a ratio to gross domestic product (GDP). Historically, the United States public debt as a share of GDP has increased during wars and recessions, and subsequently declined.
The economic policy and legacy of the George W. Bush administration was characterized by significant income tax cuts in 2001 and 2003, the implementation of Medicare Part D in 2003, increased military spending for two wars, a housing bubble that contributed to the subprime mortgage crisis of 2007–2008, and the Great Recession that followed. Economic performance during the period was adversely affected by two recessions, in 2001 and 2007–2009.
The United States subprime mortgage crisis was a multinational financial crisis that occurred between 2007 and 2010 that contributed to the 2007–2008 global financial crisis. It was triggered by a large decline in US home prices after the collapse of a housing bubble, leading to mortgage delinquencies, foreclosures, and the devaluation of housing-related securities. Declines in residential investment preceded the Great Recession and were followed by reductions in household spending and then business investment. Spending reductions were more significant in areas with a combination of high household debt and larger housing price declines.
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Douglas William Elmendorf is an American economist who is the dean and Don K. Price Professor of Public Policy at the John F. Kennedy School of Government. He previously served as the Director of the Congressional Budget Office (CBO) from 2009 to 2015. He was a Brookings Institution senior fellow from 2007 to 2009, and briefly in 2015 following his time at the CBO, and was a director of the Hamilton Project at Brookings.
Foreign trade of the United States comprises the international imports and exports of the United States. The country is among the top three global importers and exporters.
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The balance of trade of the United States moved into substantial deficit from the late 1990s, especially with China and other Asian countries. This has been accompanied by a relatively low savings ratio and high levels of government and corporate debt. Debate continues over the causes and impacts of this trade deficit, and the nature of any measures required in response.
The Great Recession in the United States was a severe financial crisis combined with a deep recession. While the recession officially lasted from December 2007 to June 2009, it took many years for the economy to recover to pre-crisis levels of employment and output. This slow recovery was due in part to households and financial institutions paying off debts accumulated in the years preceding the crisis along with restrained government spending following initial stimulus efforts. It followed the bursting of the housing bubble, the housing market correction and subprime mortgage crisis.
The United States debt ceiling or debt limit is a legislative limit on the amount of national debt that can be incurred by the U.S. Treasury, thus limiting how much money the federal government may pay on the debt they already borrowed. The debt ceiling is an aggregate figure that applies to the gross debt, which includes debt in the hands of the public and in intra-government accounts. About 0.5% of debt is not covered by the ceiling. Because expenditures are authorized by separate legislation, the debt ceiling does not directly limit government deficits. In effect, it can only restrain the Treasury from paying for expenditures and other financial obligations after the limit has been reached, but which have already been approved and appropriated.
The United States debt-ceiling crisis of 2011 was a stage in the ongoing political debate in the United States Congress about the appropriate level of government spending and its effect on the national debt and deficit. The debate centered on the raising of the debt ceiling, which is normally raised without debate. The crisis led to the passage of the Budget Control Act of 2011.
The United Kingdom national debt is the total quantity of money borrowed by the Government of the United Kingdom at any time through the issue of securities by the British Treasury and other government agencies.
Political debates about the United States federal budget discusses some of the more significant U.S. budgetary debates of the 21st century. These include the causes of debt increases, the impact of tax cuts, specific events such as the United States fiscal cliff, the effectiveness of stimulus, and the impact of the Great Recession, among others. The article explains how to analyze the U.S. budget as well as the competing economic schools of thought that support the budgetary positions of the major parties.
Deficit reduction in the United States refers to taxation, spending, and economic policy debates and proposals designed to reduce the Federal budget deficit. Government agencies including the Government Accountability Office (GAO), Congressional Budget Office (CBO), the Office of Management and Budget (OMB), and the U.S. Treasury Department have reported that the federal government is facing a series of important long-run financing challenges, mainly driven by an aging population, rising healthcare costs per person, and rising interest payments on the national debt.
The trillion-dollar coin is a concept that emerged during the United States debt-ceiling crisis of 2011, as a proposed way to bypass any necessity for the United States Congress to raise the country's borrowing limit, through the minting of very high-value platinum coins. The concept gained more mainstream attention by late 2012 during the debates over the United States fiscal cliff negotiations and renewed debt-ceiling discussions. After reaching the headlines during the week of January 7, 2013, use of the trillion-dollar coin concept was ultimately rejected by the Federal Reserve and the Treasury.
The economic policy of the Donald Trump administration was characterized by the individual and corporate tax cuts, attempts to repeal the Affordable Care Act ("Obamacare"), trade protectionism, immigration restriction, deregulation focused on the energy and financial sectors, and responses to the COVID-19 pandemic.
References
- ↑ "About". Defeat The Debt.
- ↑ Casey, Michael (October 29, 2009). "Weak Dollar, Mega-Deficit Fail to Dent Debt Appetite". Wall Street Journal.
- ↑ "Historical Debt Outstanding - Annual 2000 - 2009". US Treasury. Archived from the original on 2012-06-03. Retrieved 2010-08-23.
- ↑ "Of debt and deadbeats". The Economist. October 8, 2009.
- ↑ "A group of activists from DefeatTheDebt.com dressed up as Uncle Sam to raise awareness of the U.S. government's deficit of close to $12 trillion". Reuters. October 28, 2009. Archived from the original on March 13, 2016.
- ↑ "Defeat The Debt Pledge Commercial". YouTube. Archived from the original on 2021-12-21.
- ↑ "Super Bowl ads as 'teachable moments'". Washington Examiner. February 9, 2010.[ permanent dead link ]