Now that the drawn-out battle to raise the national debt ceiling is finally behind us, some people might be wondering how the U.S. will ever manage to pay off its $14 trillion and counting national debt.
The answer is, it probably won't, if history is any guide.
For those brave souls who want to see how the U.S. got so deep in the hole, the Treasury Department has an area of its website devoted to the nation's debt, showing the total on a year-by-year basis. While it's easy to be overwhelmed by the numbers, it makes instructive reading.
What becomes apparent, even to the most casual observer, is that in almost every year since World War II, the national debt has gone up. In good times and bad, the U.S. Government has borrowed more money.
In June 1941, six months before America was thrust into World War II, the national debt stood at $48.9 billion. When war came, the government had to borrow massive amounts of money, mostly through the sale of “war bonds,” to raise funds to support the war effort.
By June 1946, with the war finally won, the federal debt stood at $269.4 billion, more than five times what it was five years earlier. During the post-war years that followed, as America returned to prosperity and rebuilt Europe, the debt remained at about that level. Despite the country's return to prosperity, the large war-time debt was not paid down.
In fact, except for a couple of years in the 1950s when it went down slightly, the debt steadily rose over the next half-century. It stood at $288.9 billion in June 1961, six months into the presidency of John F. Kennedy. In 1966, after President Johnson launched a “War on Poverty,” a ground war in Vietnam and Medicare, the national debt was still just $319.9 billion.
The national debt rose sharply during the inflation of the 1970s, hitting a half-trillion dollars on Gerald Ford's watch in 1975 and $907 billion during Jimmy Carter's last year in office, in 1980.
The $1 trillion mark
The debt passed the $1 trillion mark during Ronald Reagan's second year in office and surpassed $2 trillion four years later, after tax cuts and massive defense spending.
The debt had doubled again by the time Bill Clinton was elected in 1992. And while the 1990s were a time of robust economic growth and a booming stock market, the U.S. did nothing to reduce its debt, though its growth slowed noticeably over Clinton's eight years.
During George W. Bush's administration, the national debt nearly doubled again, from $5.8 trillion to $10 trillion.
Why didn't the U.S. pay down it's debt after World War II? The U.S. economy was much bigger than before, and many felt $250 billion or so wasn't such a big deal, since it was about the same percentage of the economy in 1950 as $49 billion was before the war.
As the economy grew in the 1950s and 60s, the size of the debt, as a percentage of the overall economy, continued to get smaller, even as the numbers got bigger. Now, however, the economy isn't growing very much, and the debt becomes bigger in terms of numbers and as a percentage of Gross Domestic Product (GDP).
As every consumer knows, paying off debt isn't all that pleasant. It requires using present resources to pay for things consumed in the past. In political terms, it would probably require Congress to raise taxes and cut spending, with the resulting surplus going, not for new spending that would please constituents and stimulate the economy, but to retire debt. Not a formula for winning re-election.
With the debt ceiling now at $16.4 trillion, will Congress ever start paying down the debt, just as consumers are paying off their credit cards?
Stranger things have happened, but over the last 60 years, paying off the national debt hasn't been one of them.