Debt

The national debt ($36.19 T) is the total amount of outstanding borrowing by the U.S. Federal Government accumulated over the nation’s history.A deficit occurs when the federal government’s spending exceeds its revenues. The federal government has now run up a debt of over 35 trillion dollars. When you write out thirty six trillion bucks it looks like this: $36,192,895,704,983.00. Wow! That’s a lot of money to owe! Over the past 100 years, the U.S. federal debt has increased from $394 B in 1924 to $35.46 T in 2024. The national debt is the amount of money the federal government has borrowed to cover the outstanding balance of expenses incurred over time. In a given fiscal year (FY), when spending (ex. money for roadways) exceeds revenue (ex. money from federal income tax), a budget deficit results. To pay for this deficit, the federal government borrows money by selling marketable securities such as Treasury bonds, bills, notes, floating rate notes, and Treasury inflation-protected securities (TIPS). The national debt is the accumulation of this borrowing along with associated interest owed to the investors who purchased these securities. As the federal government experiences reoccurring deficits, which is common, the national debt grows. Simply put, the national debt is similar to a person using a credit card for purchases and not paying off the full balance each month. The cost of purchases exceeding the amount paid off represents a deficit, while accumulated deficits over time represents a person’s overall debt.

 
 

Questions

  1. Translate debt into plain English.

  2. What is the current United States government debt?

  3. What is the relationship between budget deficits and debt?

  4. Identify one political advantage of running a government debt.

  5. Identify one political disadvantage of running a government debt.

  6. What emoji best illustrates the concept of debt?

  7. What would be one way for a government to stop running a debt?

  8. How does the U.S. government finance its debt?

  9. What would happen if the U.S. government suddenly refused to pay its debts?

  10. Who does the U.S. owe this debt to?

Remember!

Now, let’s commit this term to our long-term memory. On a scrap piece of paper, take 10 or 20 seconds to draw debt! Draw with symbols or stick figures if you wish. Nothing fancy. Don’t expect a masterpiece. No one else will see this but you. Look at your drawing. That’s all - now it’s downloaded into your memory. Destroy the piece of paper in a most delightful way.


Further Review

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