That’s the Federal debt. It crossed that threshold around the time this issue went to print and is a grim milestone to say the least. I wonder if we can just put it on a credit card and be done with it?
Let me give you an illustration I like to use in trying to help people understand the magnitude of our multi-trillion dollar GDP, and the Federal debt our politicians have created along the way. Imagine that someone gives you $1. What can you do with that? Not much. It used to get you a candy bar and a newspaper, but no longer. Now imagine someone gives you $1,000. Now we’re talking. You can buy some really nice clothes, have a fancy dinner out with the family, or maybe even make a down payment on a new car when auto makers and their dealers are offering low down payments as part of a promotion. The point is that $1,000 has a great deal more buying power than $1.
Well there is my point: if $1,000,000 is equivalent to the single $1 in my illustration, then a billion dollars is like the $1,000 in my lesson—it is one-thousand times $1,000,000, which is a staggering amount of money to try to comprehend. And a trillion dollars is one million-million dollars!
How we got here is hard for me to comprehend, given that I am 74 years old, and I remember when the entire Federal Budget exceeded $100 billion for the first time in the Kennedy administration. At that time, the Federal debt was $298 billion, but remember we were still digging out of the debt created by the Great Depression and World War II. Just 30 years ago, in 1996, the Federal debt was $5 trillion, so it has increased eight-fold in the past 30 years.
WRONG TURN
It’s easy to forget that less than a generation ago, the U.S. government’s fiscal trajectory was excellent. In 2001, the federal government had been running an annual surplus for four years and the Congressional Budget Office even projected that the national debt would effectively be zero by 2009.
That, suffice to say, did not happen. The national debt instead grew, reaching $10 trillion in 2008 and then quadrupling over the next 18 years to this recent gloomy milestone of more than $40 trillion in total debt. An independent survey has laid out in unsparing detail how a 1.2 percent surplus in 2001 morphed into 6 percent deficits that are now the norm, though historically these levels were only seen during wars or deep recessions. The analysis was conducted before President Trump’s One Big Beautiful Bill Act, which is projected to add more than $4 trillion to the national debt on its own, yet still found that major tax cuts enacted under George W. Bush and in Trump’s first term are responsible for 37 percent of the current debt.
The U.S. ranks among the world’s most indebted countries relative to the size of its economy, but it is not number one. On the International Monetary Funds’s comparable general-government gross debt measure, U.S. debt is projected at roughly 126 percent of GDP in 2026, placing it around 10th-12th globally, depending on the country coverage and vintage of the IMF dataset.
Japan leads the world with a DGP-to-debt ratio of 204 percent, followed by Singapore at 172 percent. Other much smaller economies such as Sudan (169 percent) and Bahrain (152 percent) appear on the list, but big European Union members like Italy (138 percent) and Greece (137 percent) are notable, largely because of the extreme economic woes they suffered in the last Great Recession.
The problem is that the projection for the future shows this ratio continuing to expand. The Congressional Budget Office has the federal debt held by the public climbing through 2036, when that metric will exceed the previous post-World War II record as America started to repay the costs of funding World War II.
The lack of bipartisanship in Washington, D.C., probably means this issue will surely not be addressed until some future administration, when this concern grows big enough to tackle it.