Today we look at these three very important numbers:
5,313,245,061,227.51
4,095,006,947,061.03
9,408,252,008,288.54
What do all three of these numbers have in common (aside from the fact that they’re unfathomably large)? The answer: Public Debt! That’s right, these three figures represent the total outstanding public debt owed by the United States of America.
To be more concise: the first figure (5,313,245,061,227.51 USD) is the total debt held by the public, the second (4,095,006,947,061.03 USD) is the total amount held by other governments institutions such as China, Japan, the EU, etc, and the third equates to the total debt owed by the United States – all 9 trillion, 408 billion, 252 million, 8 thousand, 2 hundred 88 dollars and 54 cents of it.
To put that number into perspective, if every man, woman, and child alive in the US today were to front the costs, everyone would have to pay about $31,242.13 each.
The ramifications of having such a large debt is quite severe not only in the eyes of the governemnt but also in the opportunity costs incurred by the American public. Debt for the government is very similar to the debt of any firm or household in that for every dollar of debt that is incurred, interest has to be paid on the principle. In 2003 alone, interest payments added up to an estimated $318 billion USD or $318 billion USD that future generations are automatically required to pay back in order to fund the government projects of today. If this money is well spent, then all should be well as the payoff for future generations would be represented in the increased level of services that they too should be able to benefit from; services such as healthcare, education, transit systems, and national security. On the other hand, if the funds are not well spent, then the public at large and the economy would have to face mounting costs as future civil projects become increasingly more expensive.
As an example: using data from the 2003 National Population Census and the total interest payment on the level of public debt held at that time, the government would have had to raise an additional $1094.86 USD per capita in order to accomplish the same amount of projects that they could have been able to accomplish if it had no debt at all. Operating without debt is an unrealistic example since most institutions, commerical and government should leverage some debt in order to best raise capital (ie Cost of Capital) but the point should be clear: the more debt you have now the greater costs are to be expected in the future.
If you would like to keep up with exact amount of debt or acquaint yourself with historical debt figures, hop on by to the Treasury’s website found here.
Just so you know:
It’s interesting to note that on the website’s Frequently Asked Questions’ page (FAQ), they have a section entitled “How do you make a contribution to reduce the debt” wherein they give you, the taxpayer and the principle backers of such debt, instructions to whom and where you should send your checks to to help reduce the public debt. So basically, in addition to paying federal income taxes, they want us to voluntarily pick up the bill on their excessive spending habits and it’s asked so often that it’s one of their frequently asked questions? Really?
Sources: TreasuryDirect.com, CIA World Factbook – United States, US Census
