National Debt: 7 Trillion
From Reuters:
The U.S. government's national debt -- the accumulation of past budget shortfalls -- totaled more than $7 trillion for the first time as of Tuesday, according to a Treasury Department report.
In its daily financial statement released on Wednesday, the Treasury said the U.S. debt subject to a congressionally set limit totaled $7.015 trillion, up from $6.983 trillion on Friday. The government was closed on Monday for the Presidents Day holiday.
While passing the $7 trillion mark itself has little practical significance, not unlike a car's odometer rolling over, it may signal some tough political times for President Bush's administration on fiscal policy.
Matt's Chat
Honestly, I could care less. So long as we are fighting a war and this administration keeps us safe, they can spend as much as they like. I do have some preferences on what they spend the money on though...Mark should make the case for percentage of GDP. He does that much better than I do. But the reality is that $7trillion isn't that big a deal in the grand scheme of things. It's big money to you and me; but to the government, that's no big deal. (I'd love to know exactly how much has been sunk in to the Taxachusetts "Big Dig" project.)
Mark's Remarks
As Mahatma has said in the comments section, this is a very small percentage of GDP. It is like being worth 1 million dollars and spending 1000 bucks. We have more than enough to cover it, and with the history of how tax cuts actually INCREASE govt. revenue (as the wealthy invest more, they have to send more to Washington in taxes), we will be back in the black soon.
And, as many economists point out, these deficits are cyclical, and in many cases, will have long term benefits for the country. In fact, some economists have said the Bush tax cuts COMBINED with the government spending have boosted the economy. This national debt is not good, but it is not the key that everyone makes it out to be. John Podhoretz points out in his book Bush Country that with interest rates being low, the traditional worries about the deficit and debt do not apply. The previous worries when deficits and debt happened were involving inflation. However, in late 2002, the problem was deflation, or the same thing that happened to Japan in the late 1990s. So, in order to stave that off, Bush proposed the next set of cuts, which have staved things off and engendered recovery. We will get out of this hole, but it will not be done by those who seek to starve investors with higher taxes (ala John Kerry, et. al.).
