The national debt: Should we worry?

Economists remain concerned about the growing debt.
Economists remain concerned about the growing debt.
Stock image.
This week brought good news and bad news about the U.S. budget. The good news was that lawmakers reached a two-year spending deal. And the bad news was, well, that lawmakers reached a two-year spending deal.

     This is why: The budget adds $324 billion in spending, according to CBS News.  For years, economists have voiced concerns about all that spending and the country's troubling national debt. The debt is defined by the U.S. Government Accountability Offce as "the total amount of money that the federal government owes, either to its investors or to itself."
     As it turns out, we owe quite a bit. At the end of fiscal year 2018, the total federal debt was $21.6 trillion. It's inched up since then and was $22.023 trillion as of the end of June, according to the Treasury Department. So, why is the debt important? Here is the rundown, along with links for further study:

     For starters, lawmakers use two expressions -- deficit spending and the national debt. What is the difference? The U.S. Department of Treasury defines the deficit as "the difference between the money the government takes in, called receipts, and what the government spends, called outlays, each year." When there is a deficit, the treasury must borrow money for the government to pay its bills.
     The national debt is the bottom line --and all those deficits added up.

     How long has the U.S. had a debt? Let's put it this way: It isn't a new problem. The country has been borrowing money since its inception. For one thing, we had to pay for the Revolutionary War (1775-83), and the Treasury Department recounts that we did this by borrowing money from France and the Netherlands. The department was formed in 1789 to help the country borrow money and manage debt.
      The debt for paying and supplying the Continental Army was about $80 million, according to Smithsonian Magazine, and the first treasury secretary, Alexander Hamilton, proposed paying for it through land sales and taxes on luxuries such as alcohol.

     Why is the national debt so high now? To understand, consider that tax cuts are popular but aren't always a good idea. Our national debt grows when tax revenue falls while federal spending increases.

     So, should we worry? "In our extended baseline projections, budget deficits drive federal debt held by the public to unprecedented levels," writes Phill Swagel, Congressional Budget Office director in an online post last month. "Debt rises from 78 percent of gross domestic product (GDP) in 2019, which is already high by historical standards, to 144 percent by 2049."
     As of 2018, the U.S. government had $3.3 trillion in revenue -- money taken in from sources such as taxes. It had considerably more, $4.1 trillion, in outlays, or money spent on programs such as defense and Social Security, according to the Congressional Budget Office. It's a bit like having a credit card. As the amount owed grows higher, it becomes more and more difficult to pay.


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