How Big Is the US Debt? (360 Video)
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US government debt is now bigger than the debt of any other government in human history. But does the size really matter? Join Professor Antony Davies as he explores the debt with this 360 video
- What If the National Debt Were Your Debt? (video): Still having a hard time understanding the scale of the national debt? Check out this video to see how much the government would owe if it were the size of the average American household
- What Are the Dangers of Too Much Debt? (video): Why should we even care about the debt? Professor Davies explains what will happen if the government takes on too much debt
- Are the Greeks Villains if They Default on Their National Debt? - Learn Liberty (video): What happens when a country defaults on its debts? Professor Garett Jones argues that if done right, it could actually make the economy better
For comparison, the annual output of the whole U.S. economy is only $18 trillion, but there's more. In addition to its debt, the government owes what are called unfunded obligations. These are future social security and medicare payments that the government has promised to retirees, but which it does not have the money to pay. The present value of unfunded obligations is about $70 trillion. That means that the total amount of money the U.S. government either owes or has promised and cannot pay, is almost $90 trillion.
That figure is nearly 40% higher than it was just five years ago and it's about $10 trillion more than the annual economic output of the entire planet. The United States Government owes more money than any other government ever in human history. At $20 trillion, the federal debt is so massive that many people don't even understand the words and numbers used to describe the amount, but if we look at the physical size of the dollars comprising the government's debt, we can start to see how extremely serious a problem the debt is.
Even when people can visualize the magnitude of the government's debt, they often ask, "Why does it matter? Why can't the government just keep borrowing?" The answer is that it can't, because eventually the debt becomes unsustainable. The federal government has borrowed so much money that it is running out of places to borrow more. Somewhere between now and then, the federal government will run out of financial fuel. When that happens, three things follow. The government could be forced to make significant cuts to public services. The government could be forced to increase taxes.
The Federal Reserve could be forced to monetize government spending by printing money. These options are drastic and their consequences would be disastrous, but there is still hope. Our economy won't be large enough to sustain the government we have today for another five to six years, so one solution is to freeze total government spending for five to six years, to give the economy time to grow large enough to support the government. At the end of those five to six years, the government would have its first balanced budget in decades. Government spending could then resume growing, so long as it did not grow faster than the economy.
The government's massive debt would remain, but it would have stopped growing, and if the government continued to restrict its growth to match that of the economy, over the next century the economy and with it the government's tax revenue would have grown so much as to make today's massive debt trivial. If you would like to learn more about how we can pay down the debt, click here to see the full video and subscribe to Learn Liberty.