National Debt Essay

The United States was born in debt. Our nation from the first year in which we were created were in debt. The US started keeping track of our debt since 1790. In 1790 the US started with a 30% debt to Gross Domestic Product, with our actually debt in dollars at around 75 million. During this time period the Continental Congress did not have enough power of the country to tax. The Congress used different methods to try and pay the debt of the new country. One way was printing new currency which didn’t work out. It first tried to pay for stuff by printing money. This currency, known as the Continental, collapsed. The US government then tried borrowing from a lot of different companies.
After the different methods applied by the government the US owed roughly 12 million
dollars to the French and Dutch government and about 40 million to creditors. The US also owed various countries in Europe around 25 million. This is when tariffs and taxes came into play. The US treasury realized it needed to make its payments to its creditors or else they wouldn’t be able to borrow from them again.
The citizens were really angry. Who wouldn’t be? They just broke free from Britain's grasp and taxes and now they are back where they started. There were even some revolts among people in the country but the government dealt with it and continued to tax. This also helped the economy. The GDP ratio mentioned earlier shrunk in effect. It was lowered to around 10%. All of this taxing and lowering of everything was soon done for nothing though. The war of 1812 caused us to have to borrow again in order to finance the war. After the war the government did the same thing as before and taxed the citizens. Lowering the debt. Throughout history the national debt constantly goes up and down. The nation needs to borrow a lot of money in order to finance certain wars and then after the war is over it is either stabilized or lowered. The Civil War caused a surge in debt next. The nation was at around 65 million in debt which was not that much. It surged to 2.76 billion. The government did various things like usual to drop the debt.
They succeeded and in the year 1916 the amount of debt the nation had was only about 2.7% of the economy. Then WWI happened. The national debt raised to 25 billion at the time which is a lot more in today's dollars. But again, after the war subsided we got the debt back down to around 9 billion by 1930. A huge point in the US national debt history is our debt limit. This was created and voted on by Congress before WWI. Congress set a limit to how much our government can borrow so we don’t end up borrowing too much. The roaring twenties passed and The Great Depression came into the ball game. The US government changed under FDR’s New Deal concepts. During this time period the debt had its biggest increase. The debt jumped to 40 billion. This may not seem like that much but realize that the economy during this time was non existent. There was no way to pay this enormous amount of money off like there was before. This caused the debt to GDP ratio to jump to 45%, the highest ever. After the government finally started to get its feet under them WWII occurred. This destroyed the debt to GDP ratio. It rose to a whopping
113%. The debt rose to 240 billion dollars in the year 1946. After WWI the government really tried to get rid of all its debt. This was not the case for WWII. Although the economy did grow and the debt shrank it was the main focus. The debt to GDP ratio got back to what it was around the 1960’s. The ratio again rose during the 1980’s during a somewhat bad recession. Under President Reagan’s term he provided huge spending on our military and our social programs. In the US history we would only have huge surges in debt when wars occured but this shot the debt to GDP ratio up to 50% during the early 1990’s. In the year 1995 the debt in dollars was about 3.5 trillion. However taxes increased a lot in the 1990’s and the was a large growth in the nation's economics which helped out with the huge numbers in debt. Everything was lowering and in 2001 the debt to GDP ratio hit around 30%. Another recession then occured and huge amounts of spending went to military because of Septemeber 11. In 2008 debt hit 5.8 trillion and the ratio went up to 40%. The Great Recession the occured as all of these increases were occuring making everything worse. Government revenue shrank a lot which made it extremely difficult to pay of the rising debts. At the same time the government had to spend a lot because they needed to provide multiple different things for the people of the nation during this tough time. In 2012 after The Great Recession subsided the debt was at 10.5 trillion. The debt to GDP ratio was just under 100%. This ratio being so high is bad for our economy. Currently in 2016 the US debt is at around 19 trillion dollars around $60 thousand dollars per household. By the end of this year it is predicted to grow to 22 trillion.