Federal debt climbs above $18 trillion
Last week, with little fanfare, the U.S. national debt climbed above $18 trillion.
The debt is different from the annual federal deficit, which is more frequently covered in news reports. Every year the federal budget either runs at a surplus, balances, or (far more often) runs a deficit. The sum of all of these annual deficits is the national debt. It is the net total amount borrowed by the U.S. government in its history. And every year of deficit spending – even small deficits, or falling deficits – adds to the national debt. For example, if you compare it to household finances, the deficit is how much a family spends each month compared to what they can afford, while the debt is the total sum, month after month, that they may owe on their credit card.
This is important because much of the talk in Washington over the last few years has focused on deficits – with much less focus on the mounting debt. A quick review of press coverage brings plenty of examples. The president has taken credit for $4 trillion in deficit reduction and assured us there is no “debt crisis.” Last year the president claimed credit for the first sub-$1 trillion deficit of his presidency. We were told this year that the annual deficit recently shrank to “its lowest level” under this administration (although it will begin climbing again soon).
Through it all, the national debt has climbed constantly. It was $10.626 trillion on January 20, 2009 – when President Obama took office – and it is now over $18 trillion. That’s an increase of approximately $7.4 trillion in less than 6 years. By comparison, the debt rose by $4.9 trillion during the 8 years of the Bush Administration. What’s more important is that the debt is projected to keep rising for as long as federal budget experts can project it. The experts at the Congressional Budget Office say the path is “unsustainable“ and may drag down the economy as well as lead to reductions in government activity given how much of its revenue will have to be devoted to paying off the debt.
So the next time someone claims a victory because the deficit is falling, ask yourself what are they doing about the debt.