U.S. National Debt: History, Causes, and Control Strategies

Introduction: Defining National Debt

The national debt of the United States is at an all-time high in dollar terms. National debt, much like personal debt, can be defined as the obligations a government has to other parties with regard to money. It can also be defined as the claims of other nations and institutions on the assets of a country. A situation of national debt arises when internal revenue collection does not generate enough to cover expenditure, thus creating the need for additional funds from other sources. Normal sources of revenue for federal governments include taxes and levies for various services such as the issuance of travel documents and licenses.

U.S. Debt History and the Growth Trend

The option to incur debt has been adopted by the United States since its inception as a nation. The national budget has therefore always tended to exceed the resources at hand, and some factors — such as the wars the country went through — contributed to the scarcity of resources.

Wars required enormous resources that were expensive to maintain. Food, water, wages for servicemen, and ammunition were just some of the costs that had to be met. The Revolutionary War, for example, resulted in a massive $75 million debt, which led the new government to seek ways to repay the debt through the issuance of bonds.

Another war that greatly increased the debt problem was the Civil War, which caused U.S. debt to rise to almost $3 billion — more than 3,500% of the debt recorded at the founding of the nation. This trend of rapid debt increase would burden America for many years to come.

As the 20th century began and the First and Second World Wars took place, the U.S. debt problem only grew worse. Other factors, such as the Great Depression and the programs established to address it, consumed resources faster than they could be collected. By mid-century, the United States had incurred a debt of over $250 billion.

The second half of the century did nothing to improve the situation. Numerous government interventions and services — including education, subsidies, utilities, medical care, and the operation of courts — required increasing funds. National security also remained a constant priority. In the span of thirty years, debt figures rose from $260 billion in 1950 to over $900 billion in 1980, and then skyrocketed to $2.7 trillion by 1990.

This trend continued in the following years, and by 2015 U.S. sovereign debt had reached an all-time high of over $18 trillion, with projections pointing toward further growth. Compared to figures from the previous century, today's debt levels are staggering — representing nearly three-quarters of the country's Gross Domestic Product.

Implications of Rapid Debt Growth

Rapid growth of national debt has serious implications for the nation's economy and for the lives of its citizens. Large and unmanageable debts may force a nation to prioritize debt payments over development spending in order to avoid sanctions from lenders. Greece is a recent example: its citizens have suffered as the nation struggles to meet scheduled payments. Taxes also tend to rise alongside debt, as additional funds must be raised to meet financial obligations.

In the United States, the national debt problem translates to more than $150,000 for every taxpayer in the country. The increase since the mid-2000s implies that the debt grows by over 7% annually. Were the country to declare bankruptcy, the consequences for citizens would be severe. The problem must therefore be treated as urgent and given the highest priority by the government.

These facts clearly indicate that debt growth should and must be limited. Every new proposal for additional borrowing must be critically examined and all alternative options exhausted before a decision is made. The government also has a moral duty to make its citizenry aware of just how large this problem has become.