It is thrice amazing; very disturbing; and somewhat disconcerting; how certain members of either political party would want you to believe half-trues, exaggerated spins and innuendos about the National Debt Service of the United States. As as you know we recently went through a created-crisis of diatribe with the bells, whistles, filibustering, and posturing regarding "The National Debt Service. Here are just a few Facts concerning the National Debt that that many people don't really know or are conveniently in denial about it.
FACT #1, The U.S. Debt Service Burden is on the decline, that's right-It is actually going down, not up. Here's why. The real measure of the Debt Burden is not the dollar amount but rather the size relative to that of the economy. For example, a rich person or family can handle a huge mortgage that would absolutely wipe out a middle class person or family. Therefore, this example equates to the truth of the matter that a large economy can handle a much larger debt service compared to a much smaller economy.
Economists measure the National Debt Service and/or Burden relative to the Gross Domestic Product GDP. That being said, under President George Bush Jr.Administration the debt service grew rapidly, because of two wars that he created, and he had to deal with a recession since he wiped out the surplus of the balance budget left by President Williams Jefferson Clinton. Due to those aforementioned circumstances this created a situation that propelled President Barack Obama to borrow money to run the government and also to clean up the debacle-of-a-mess left by President George Bush Jr.
REASON FOR THE DECLINE IN DEBT SERVICE
The rapid debt service growth ended more than a year ago. Yes, you got it right-under President Obama tenure. Remember, the wars are being diminished and the troops are coming home and/or being re-deployed else where. A credit to President Obama skillful leadership.
In addition, debt held by the public currently accounts for approx 75% of the GDP. According to the latest projections from the Congressional Budget Office (CBO). It is expected to continue to trickle down slowly to approx 71% of the GDP by 2018.
FACT#2, CHINA IS HOLDING THE U.S. HOSTAGE BECAUSE OF BORROWING....
This is not Fact but a myth: The truth is, China holds a relatively small fraction of the U.S. Debt.
The U.S. Government owes money to anyone who owns saving bonds, treasury bills or any other form of government security. Just about 40% of the total debt is held by individuals and institutions in the U.S. Approx 1/4 of the debt is held by various U.S. government trust funds who are required to invest their money in Treasury Securities. Only about 1/3 of the debt is owned by people and institutions in other countries, of which the largest of that group is China, currently it is approx 7.8% of the U.S. debt.
FACT#3, Debt Crisis and Debt Burden has marked American Politics from the early days of the Foundering Fathers.
One of the biggest National Debt fight took place during President George Washington Era. Alex Hamilton successfully pushed a plan under which the new Federal Government would assume the debt that the States has incurred during the Revolution.
Thomas Jefferson and James Madison fought the idea. In the end the two sides compromised: Congress approved the debt plan , and Hamilton backed the idea of establishing the Nation's Capital on the ban ks of the Potomac River, rather than in Philadelphia.
FACT#4, The U.S. Government has incurred debt almost all of it's entire historic existence
The Federal Government has been without debt for only one year. As a percentage of the GDP-The debt peaked at the end of World War II.and the U.S. were without any debt part of 1835 and 1836
Sources: Library of Congress archives, Congressional Budget Office, various political research polls, and personal experiential encounter of writer and editor, during tenure with three major corporate 500 companies as Div COO, Div CEO and Executive Management with responsibility for money management and investments initiatives.
compiled/edited/written by; Steve Braxton, former COO,& CEO of Corporate 500 companies and President of various non-profit organizations for public policy, advocacy, Fund Development & Governance procedures