national debt
But one seminal reality remains: America is the most indebted nation in history and now for the first time, there’s no actual debt ceiling to prevent spending. You may be one of those who think it doesn’t matter, but what if the Tea Party is correct and it does matter?
In 1989, New York real estate investor Seymour Durst spent $120,000 to erect a “National Debt Clock” in Times Square to track the exact amount of money that the U.S. federal government was borrowing to pay its bills. At the time, the country had run up a $2.7 trillion tab, a figure that seems almost quaint by today’s standards. In 2008, the clock briefly ran out of available digits when the debt topped $10 trillion. By January 2013, the upgraded clock, as it stands today, is able to display up to a quadrillion dollars (all 15 zeros!).
And so, President Obama and Congress sealed the deal on Wednesday evening to re-open the government and get around the $16.4 trillion limit on borrowing, but they didn’t actually increase the debt limit. They just temporarily suspended enforcement of it. That means Americans have no idea how much debt their government is going to rack up between now and Feb. 7, when the limits are supposed to go back into place and will no doubt be raised.
We do know that on the first day the federal government was able to borrow money again, the U.S. debt jumped a record $328 billion. The debt now equals $17.075 trillion (with 12 zeros), according to figures the Treasury Department posted online Friday. The $328 billion increase shattered the previous high of $238 billion set two years ago.
But who can help but wonder, what if the Tea Party is correct? What if the U.S. creditors come to realize that we are sliding toward a fiscal basket case and unable to live within our means? Well, then the value of the dollar will certainly plunge. Interest rates will soar. Taxes will have to be increased and all the social safety nets will be shredded.
The Tea Party people say they were fighting a moral fight by asking Congress to confront the reckless spending and near-record trillion-dollar deficits, before the United States does go bankrupt. The question is no longer if, but when. For this, they were called jihadists? Senator Obama called it immoral and unpatriotic when he was a Senator, but that was then, and this is now.
Now, it is important to understand that as of October 19, 2013, debt held by the public (or public debt) was approximately $12.117 trillion, or about 77% of GDP. Intragovernmental holdings stood at $4.958 trillion, mostly in the federal government’s largest trust funds: Social Security and Medicare, giving a combined total public debt of $17.076 trillion (They always exclude all the government exemptions such as Fannie Mae and Freddie Mac obligations, all the Guaranteed obligations, as well as the Unfunded obligations that our government takes out of the debt total for some “extraordinary” reasons).
Then the question becomes: who actually owns the public debt? Well, China is the number 2 creditor. As of July 2013, the US owed China a mere $1.28 trillion, about 13 percent of the public debt for which they are getting nervous.
Surprise! The one who stands to lose the most if the U.S. were to default on its debt, is the #1 Creditor of the United States: the American Public, and State and Local Governments. The amount of U.S. debt owed to us as of July 2013 (the latest available number) was $4.2 trillion, better than 37 percent of the public debt. Yes, the country the United States is most indebted to is … itself. Actually, the federal government borrows from a host of domestic investors, including private citizens, banks, corporations, local and state governments, and investment funds.
Why would individual Americans, businesses and local governments continue to loan money to the United States when it seems kind of risky to put money into an institution that’s already $16, now $17 trillion in the hole? Maybe because they keep printing the money to do it with.
Whether you believe it or not, The Tea Party was speaking for all of us, for our dollars and investments, our country and our taxes, for those of our children and their children, and probably their future children, who will be paying this debt. Nothing seems to stop or even slow down the fiscal madness of Washington. Now that Obama won last week, he has the U.S. credit without limits at his disposal.
God Bless America!