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News & Columns

Debt Set

By Ben Fulton
Posted // June 11,2007 -

The national debt is a topic everyone knows at least a little about. We all know it’s big, huge—perhaps even on the massive side. And every once in a while, whether through stock market pundits or public television economists, we’re assured that, yeah, America’s addiction to debt is massive, but still manageable. Indeed, even today we’re given comfort. This year’s budget deficit of $422 billion is only 3.3 percent of our Gross Domestic Product (GDP). In 1983 our $195 billion deficit was a far more worrisome 5.7 percent of GDP.


Today our debt is more than huge. It’s truly, jaw-droppingly colossal. Our nation is in hock to the tune of $7.38 trillion, going on $8.18 trillion now that the Republican-controlled U.S. Senate recently authorized $800 billion more to our debt limit.


The simple way of explaining one trillion of anything is, of course, through math. One trillion is a thousand billion, or a 1 with 12 zeros at the end: 1,000,000,000,000. But that does scant justice to the terrifying power of this quantity. A trillion seconds adds up to 31,688 years, or roughly 317 centuries. Or take this model, laid out by Fortune magazine: Say you go into business on the first day of 1 A.D. Let’s say your business did so poorly on its first day that you lost $1 million. Now imagine that you continue to lose $1 million every day of every year up to 2004. You would still have to lose $1 million every day up to the year 2737 to lose $1 trillion.


Read it and weep: $8.18 trillion. All this debt, plus our trade imbalances, means our currency is in virtual freefall. That’s no big deal for people who rarely step outside our borders. Most Americans are uninterested in what the rest of the world thinks or does, let alone what the world thinks of our current administration. But the rest of the world thinks we’re basically crazy. And it certainly matters what central banks in Asia, and our bruised allies in Europe, think. Asian banks are increasingly wary of buying up our debt. And Europe warns that if our currency falls any further we can hardly be counted as a trading partner. Say hello to rising interest rates, which we’ll need to attract lenders, and hard times worldwide.


Economic issues used to be on par with security issues, but President Bush acts as if nothing’s amiss. Those $1.35 trillion in tax cuts? Make ’em permanent. Who cares if that kind of profligacy will add $2 trillion more to our nation’s debt? Amazingly, so-called conservatives buy Bush’s line, and it’s inevitable sinker. Osama bin Laden, for one, is happy: “We are continuing this policy in bleeding America to the point of bankruptcy,” he said in his latest communiqué. Even without the costs of Middle East war, we’re doing a fabulous job of that on our own.


For liberal-minded folks with an aggressive streak, this depressing picture might have a silver lining. It was, after all, France’s massive debt under Louis XVI (part of which was incurred funding the American Revolution, by the way) that paved the way for the French Revolution and the destruction of the old regime.

 
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