Baby Boomers - The Most Selfish Generation

“The Greatest Generation” is a term coined by journalist Tom Brokaw to describe the men and women who served or supported the United States during World War II. Their willingness to personally sacrifice for the greater societal good was highlighted in Brokaw’s 1998 book of that same name.

Unfortunately, the baby boom generation – my generation – may not be remembered so fondly. An appropriate description for those of us born between 1946 and 1964 might be “The Most Selfish Generation.” I say this because of the wreckless fiscal irresponsibility we have demonstrated over the past 31 years.

Take a look at the red graph below.

At the end of 1980, the U.S. public debt was less than 1 trillion dollars. That means from the creation of this nation through 1980, the entire net accumulated amount of money borrowed by the U.S. federal government was less that 1 trillion dollars.

In 1981, about the time that baby boomers became leaders in both the public and private sectors, public policies were implemented that have led to a current public debt that exceeds 15 trillion dollars. So in the past 31 years, while baby boomers have been running things, the U.S. public debt has increased by more than 14 trillion dollars. In other words, over the past three decades, the United States has consumed 14 trillion dollars of government services we have not paid for and that we will pass to future generations.

For those of you who were born after 1964, I have two words for you …. You’re welcome. …. 15 trillion dollars of debt (and still counting) … that’s our gift to future generations.

To be fair, money borrowed today does not have the same purchasing power as the dollars of the past. So let’s take a look at the purple illustration below.

When the public debt is adjusted for inflation, the diagram illustrates my case even better. In the first 200 years of U.S. history, the federal government paid its bills (for the most part). In some years we ran modest deficits (you can see the big bump to pay for World War II), but we usually paid our bills. This changed in 1981 when taxes were cut under the leadership of President Ronald Reagan, but there was NOT a corresponding decrease in government services. The ultimate irony is that in his 1981 inaugural address, President Reagan warned of the dangers of public debt, saying:

For decades, we have piled deficit upon deficit, mortgaging our future and our children's future for the temporary convenience of the present. To continue this long trend is to guarantee tremendous social, cultural, political, and economic upheavals.

Yet, Reagan helped create a culture of hypocrisy in which we complain about public debt, but seem to continually demand further tax cuts while steadfastly refusing to sacrifice any of the government benefits we expect.

The military conflicts of the past decade in Iraq and Afghanistan are the first time in U.S. history that we have cut taxes in a time of war. When men and women of mostly younger generations are sacrificing their lives for our country, we – the baby boomers – refuse even to pay the financial costs of supporting them – choosing instead to pass the costs to our children, grandchildren, and future generations. And let’s not forget that while reducing federal government revenues through the Bush tax cuts of 2001 and 2003, we also greatly expanded the size and scope of the U.S. federal government through the implementation of Medicare Part D which subsidizes the costs of prescription medications.

The diagram above illustrates the U.S. public debt as a percentage of gross domestic product. It shows our debt in relation to our income. Richer countries and richer people can afford more debt than poorer ones. But even by this measure, the wrecklessness of baby boomer public policies is evident.

You may notice in this graph, as in the previous two illustrations, that there is a decrease in the U.S. public debt in the late 1990s. It is natural and normal for there to be ups and downs in economic activity over time. Economists call this the business cycle. And the surpluses of the late 1990s correspond to being in a properous part of the business cycle. But these budget surpluses were primarily the result of the short-term willingness of Congress to impose on itself pay-as-you-go (PAYGO) rules that require any new spending to be funded by increased revenues or offset by reductions in other expenditures. But as yet another example of baby-boomer selfishness, these rules were abandoned in 2001 (fiscal year 2002) to allow for the popular tax cuts and the subsequent increases in government expenditures.

A June 10, 2009 New York Times article, "America's Sea of Red Ink was Years in the Making," and an accompanying diagram explain and illustrate how U.S. budget surpluses became deficits. The major components and their relative magnitudes are illustrated by the downward arrows. The contributing factors were:

(1) The early 2000s recession caused reduced tax revenues and increased government assistance (- $291 billion a year)

(2) The Bush policies (tax cuts, Iraq war, Medicare prescription drugs) (- $673 billion)

(3) The late 2000s recession (Dec. 2007-2009) also reduced tax revenues and increased government assistance (- $479 billion)

(4) Wall Street Bailouts (begun under Bush & continued under Obama) (-$185 billion)

(5) Other programs supported by both the Bush & Obama administrations, such as the Iraq war and a patch for the alternative minimum tax (- $232 billion)

(6) Stimulus spending (- $145 billion), and

(7) Other Obama programs (- $56 billion).

A July 2011 diagram (above) from The New York Times series, "Charting the American Debt Crisis," shows (on the right) how much of the $14.3 trillion debt (at the time) was accumulated under each U.S. President and (on the left) who holds the debt.

This should NOT be a partisan issue. At a fiscal forum at Jacksonville University on January 26, 2012, former Republican Senator Mel Martinez joined JU alumnus David Walker, the former Comptroller General of the United States and the founder and CEO of the Comeback America Initiative; and Robert Bixby, the executive director of the Concord Coalition; to convey a similar message: federal revenues [as a percentage of gross domestic product (GDP)] are the lowest they have been and expenditures (as a percentage of GDP) are the highest since 1950. (See the diagram below.) Collectively, U.S. citizens need to pay more in taxes and receive fewer government benefits. But that is NOT a message that we want to hear.

And it is worth noting that most of those who are raising the alarm about this debt issue, are not proposing solutions that involve sacrifice by baby boomers. Indeed the refrain is that those of us at or near retirement will not receive any reduced benefits from Social Security or Medicare. The proposed reforms will reduce benefits for younger people.

Once again, I say to people born after 1964 … You’re welcome!

There is one notable exception among the voices for fiscal reform who offers a chance at redemption for baby boomers, if you want to call it that.

David Stockman, President Ronald Reagan’s budget director, advocates a one-time surcharge on the wealthy. He explains the idea in an interview he did for 60 Minutes in October 2010. Click the link above to find the interview or simply search for “David Stockman 60 Minutes.”

U.S. Debt Clock

http://www.usdebtclock.org/

Infographic: Visualizing the National Debt

Infographic Source: National Debt LifesLittleMysteries.com

Click the image above to see it completely.

Debt commission leaders paint gloomy picture

Debt commission leaders paint gloomy picture

By GLEN JOHNSON, Associated Press Writer Glen Johnson, Associated Press Writer Sun Jul 11, 9:30 pm ET

BOSTON – The heads of President Barack Obama's national debt commission painted a gloomy picture Sunday as the United States struggles to get its spending under control.

Republican Alan Simpson and Democrat Erskine Bowles told a meeting of the National Governors Association that everything needs to be considered — including curtailing popular tax breaks, such as the home mortgage deduction, and instituting a financial trigger mechanism for gaining Medicare coverage.

The nation's total federal debt next year is expected to exceed $14 trillion — about $47,000 for every U.S. resident.

"This debt is like a cancer," Bowles said in a sober presentation nonetheless lightened by humorous asides between him and Simpson. "It is truly going to destroy the country from within."

Simpson said the entirety of the nation's current discretionary spending is consumed by the Medicare, Medicaid and Social Security programs.

"The rest of the federal government, including fighting two wars, homeland security, education, art, culture, you name it, veterans, the whole rest of the discretionary budget, is being financed by China and other countries," said Simpson. China alone currently holds $920 billion in U.S. IOUs.

Bowles said if the U.S. makes no changes it will be spending $2 trillion by 2020 just for interest on the national debt.

"Just think about that: All that money, going somewhere else, to create jobs and opportunity somewhere else," he said.

Simpson, the former Republican senator from Wyoming, and Bowles, the former White House chief of staff under Democratic President Bill Clinton, head an 18-member commission. It's charged with coming up with a plan by Dec. 1 to reduce the government's annual deficits to 3 percent of the national economy by 2015.

Bowles led successful 1997 talks with Republicans on a balanced budget bill that produced government surpluses the last three years Clinton was in office and the first year of Republican George W. Bush's presidency. Simpson, as the Senate's GOP whip in 1990, helped round up votes for a budget bill in which President George H.W. Bush broke his "read my lips" pledge not to raise taxes.

Despite their backgrounds, both Simpson and Bowles said they were not 100 percent confident of success this time around.

Simpson labeled the commission members "good people of deep, deep difference, knowing the possibility of the odds of success are rather harrowing to say the least."

Bowles also said Congress had to be ready to accept the commission's findings.

"What we do is not so hard to figure out; it's the political consequences of doing it that makes it really tough," he said.

Arkansas Gov. Mike Beebe was one of those leaders who sat in rapt attention during the presentation, one of the first in public by the commission leaders.

"I don't know that I ever heard a gloomier picture painted that created more hope for me," said Beebe, commending its frankness.

___

Online:

http://www.fiscalcommission.gov/

Is There Too Much Worry About the Debt?

In the March 15, 2010 TIME magazine article "Is There Too Much Worry About the Debt?," Zachary Karabell argues that the U.S. should not lose sight of the things that increase productivity and lead to real economic growth (which in turn, increase tax revenues): investment in physical capital (infrastructure, factories and machines), human capital (education and skills training), and technology.

Mort Zuckerman: Political Leaders Must Deal With the National Debt or Future Generations Will Pay

Mort Zuckerman: Political Leaders Must Deal With the National Debt or Future Generations Will Pay

The Hidden U.S. Debt Problem

In the March 1, 2010 CNNMoney article "America's hidden debt problem," Jeanne Sahadi says"America's total debt load is on pace to top $13 trillion this year, and $22 trillion by 2020 -- and that's just the debt we're counting."

What's not being counted: potential debt bombs that don't get factored into most budget analysis.

When anyone talks about U.S. debt, they typically refer to two numbers.

The first is the debt held by the public. That's money owed to those who have bought U.S. Treasurys, most notably big bond mutual funds and foreign governments. Debt held by the public today is roughly $8 trillion and rising.

The second number is the money the federal government owes to government trust funds, such as those for Medicare and Social Security. The government has used revenue collected for those programs to cover other outlays. Currently, the debt to the trust funds is approaching $5 trillion.

The two combined is the total gross debt that's accounted for. But deficit hawks also worry about what's not on the books.

Here is just a sampling of the unseen or underplayed obligations that could worsen the debt outlook:

Losses from Fannie Mae and Freddie Mac

Mortgage giants Fannie Mae and Freddie Mac are private companies that for years had the implicit backing of the federal government. That backing assured investors that if anything went seriously south for the companies Uncle Sam likely -- although not absolutely -- would step in.

Well, things did go south, and now both are run by the federal government.

While the implicit guarantee has become explicit for Fannie and Freddie, its treatment in the budget is up in the air.

"Our budget doesn't have Fannie Mae and Freddie Mac on it, even though it's owned lock, stock and barrel by the American taxpayer," said Rudolph Penner, a former director of the Congressional Budget Office (CBO) during a conference held by the Peterson-Pew Commission on Budget Reform.

Last year, the CBO did start to account for both companies as if they were federal agencies on the budget. But the White House Budget Office only includes some potential costs because the future of the two companies is still under consideration. Last week, a Republican congressman introduced a bill that would require the two agencies be put on the budget.

It's still not clear what the companies' total hit to the federal budget will be. Amherst Securities, a broker-dealer in residential mortgage-backed securities, estimated that the total loss on the mortgages backed by the companies could reach $448 billion, with a portion of that covered by reserves or assumed by outside parties. The CBO estimated the net costs to the government could top $370 billion by 2020.

These are just estimates. But what's clear is that Fannie and Freddie are not cheap dependents.

That's why some argue that lawmakers should assess the potential costs of implicit government guarantees well before things go to pot.

"Their costs are largely unmeasured, unrecognized in the budget and unmanaged," federal budget expert Marvin Phaup wrote in a recent paper. "A troubling aspect of current policy aimed at restarting the financial markets is the likely expansion of implied guarantees to include the obligations of additional private financial institutions."

Unfunded promises

The governments' accrued debt to the Social Security and Medicare trust funds is known. And making those payments -- which begin in earnest this decade --won't be easy given the drop in federal revenue and the surge in government spending.

"[Lawmakers] need to acknowledge they have no way of funding them right now," said tax expert Len Burman, a professor of public administration and economics at Syracuse University.

But the piece of future entitlement debt that's not reflected under current budget protocols is what the government will have to pay into the system after its payments to the trust funds end -- which will happen by 2037 for Social Security and within the next decade for Medicare.

At that point, the programs will only be collecting enough in taxes to pay a portion of the benefits currently promised. There will be enormous pressure on the government to make up the difference, and Uncle Sam would have to borrow a lot of money to do so.

Some budget experts like Stuart Butler, vice president for domestic and economic policy at the conservative Heritage Foundation, would like to see the long-term obligations to Medicare and Social Security included in lawmakers' annual consideration of the federal budget.

Right now, money allocated to both entitlement programs is considered "mandatory" spending and therefore the spending increases for the programs are on autopilot and the financial commitment is uncapped in future years.

True cost of tax breaks

Everybody loves tax breaks. And there's more than a trillion dollars of them to love.

That's the amount of money the Treasury foregoes in annual revenue as a result of the many breaks in the tax code. And that effectively increases the government's need to borrow.

But that trillion-plus isn't really up for consideration during annual budget discussions. "Tax expenditures are basically hidden," Burman said.

No one advocates abolishing tax breaks altogether. But Burman and others believe tax breaks should be treated as discretionary spending. The idea is to bring them into the open so lawmakers can make a conscious decision annually about what they spend on tax breaks and recognize the costs associated with that decision.

Long-term costs of new rules

This year is the first year in which high-income investors with traditional IRAs or 401(k)s -- both of which let savings grow tax-deferred until withdrawn -- will have a chance to convert their accounts into Roth IRAs, where investments grow tax-free.

The new conversion rule is scored as a revenue raiser on the federal budget over the next decade because those who convert must pay the tax owed on their traditional IRA savings the year they convert.

But long-term it's a different story. Since investments in the converted accounts will grow tax-free, Uncle Sam will collect less revenue than he otherwise might have had the investors kept their ever-larger savings in a traditional IRA and paid taxes on them in retirement.

"It will cost federal coffers a lot beyond the 10-year window," Burman said.

Big nations with major debt dangers

In the January 15, 2010 Business Week article "Debtor Nations," Mark Scott explains how excessive public debt is threatening the global economy:

The Debt Bomb Facing the World

If policymakers focused their attention in 2009 on dragging the global economy out of recession, this year looks likely to center on reining in the massive piles of government debt built up by big bailout packages. Failing to wrestle down the fiscal debt monster could stall the nascent worldwide economic recovery.

Already this year, international rating agencies have warned about unsustainable budget deficits in Greece and Ireland, and most members of the euro zone have sailed past the 3% budget deficit cap required for membership in the common European currency. Government debt ratios in the U.S. and Britain could take decades to return to normal levels.

Countries are fiendishly trying to tackle the problem. On deck for this year are spending cuts, tax increases, and other belt-tightening measures designed to corral overstretched government accounts. Yet politicians must balance tougher fiscal policy with maintaining continued support for weak domestic production. Economists fear pulling back too soon could ruin attempts to reignite the economy.

Read on to see how indebted some of the world's largest countries are—and who are the deepest in the red—as well as what they're doing to deal with the problem.


ICELAND

Sovereign Credit Rating: BBB-
Debt-to-GDP Ratio (2009*): 310%
Current Account Balance, 2010 (Estimate**): 0.7%
GDP Growth, 2010 (Estimate): –2.0%
Budget Deficit Ratio, 2010 (Estimate): –9.9%

Iceland made headlines in 2009 as the world's first "subprime nation." The implosion of the country's financial-services industry left it with debt three times domestic GDP, and forced Iceland to go cap-in-hand to the International Monetary Fund for a $2.1 billion bailout. Yet when President Olafur Grimsson vetoed legislation on Jan. 6 that would have repaid $6 billion to British and Dutch authorities for covering their local depositors in a failed Icelandic bank, the country's international financial lifeline was put in jeopardy.

* Latest available figure
** All 2010 figures here and subsequently are forecasts.


GREECE

Sovereign Credit Rating: BBB+
Debt-to-GDP Ratio, 2010: 124.9%*
Current Account Balance, 2010: –9.0%
GDP Growth, 2010: –0.1%
Budget Deficit Ratio, 2010: –9.0%

With the largest debt burden relative to the size of its domestic economy in Europe, Greece is viewed as the sick man of the region. Not helping matters, the European Commission criticized the country on Jan. 12 for publishing false economic numbers. That comes after local policymakers were forced to revise the 2008 budget deficit figure to 12.7%—three times an earlier forecast. To get the country's books in order, politicians want to raise an extra $6.5 billion this year through pay freezes for government workers and new taxes.

* Source: European Commission


UNITED STATES

Sovereign Credit Rating: AAA
Debt-to-GDP Ratio, 2010: 93.6%
Current Account Balance, 2010: –2.2%
GDP Growth, 2010: 1.5%
Budget Deficit Ratio, 2010: –9.9%

The $787 billion economic stimulus package and the further billions of dollars pumped into the financial-services sector have pushed America's debt burden to almost 100% of annual GDP. That's unsustainable in the long term, but expected 1.5% growth in the domestic economy this year has reassured investors that debt levels remain manageable. While no widespread tax increases are on tap this year, the Obama Administration is planning some targeted taxes to fill the gap. But health-care reform currently working its way through Congress could add billions of dollars to the federal budget.


GREAT BRITAIN

Sovereign Credit Rating: AAA
Debt-to-GDP Ratio, 2010: 81.7%*
Current Account Balance, 2010: –1.9%
GDP Growth, 2010: 0.9%
Budget Deficit Ratio, 2010: –13.2%

With one of the worst budget deficits in the European Union, Britain must tighten its belt or face dire fiscal problems. No definite plans are expected before a national election later this spring, although all major political parties agree government spending must be cut and taxes will increase. The official retirement age also may rise to ease the country's financial woes, which are particularly dire due to the British economy's reliance on the financial-services industry.

* The European Commission pegs the ratio at 80.3%.


SPAIN

Sovereign Credit Rating: AA
Debt-to-GDP Ratio, 2010: 66.3%*
Current Account Balance, 2010: –4.7%
GDP Growth, 2010: –0.7%
Budget Deficit Ratio, 2010: –12.3%

After Spain's credit-fueled construction and real estate sectors imploded, the country's once prosperous economy turned into one of the worst performers in Europe. A large budget surplus before the crisis began will likely turn into a 12% deficit this year, and Spain's uncompetitive workforce has exacerbated the country's current account deficit. To turn things around, analysts reckon the Iberian country must overcome its many structural problems, such as a low caliber of tertiary education and relatively high labor costs.

* Source: European Commission


IRELAND

Sovereign Credit Rating: AA
Debt-to-GDP Ratio, 2010: 82.9%*
Current Account Balance, 2010: 0.6%
GDP Growth, 2010: –2.5%
Budget Deficit Ratio, 2010: –13.5%

Once known as the Celtic Tiger, Ireland had the wind knocked out of its sails by the credit crunch. The local housing market contracted 19% last year and the economy shank 7.5%. In response, the Irish government has slashed $5.8 billion from its 2010 budget, including pay cuts for government workers and reductions in subsidies for parents of young children. Affected workers haven't taken the belt-tightening lying down: Thousands took to the Dublin streets in late 2009 to protest.

* Source: European Commission


MEXICO

Sovereign Credit Rating: BBB
Debt-to-GDP Ratio, 2010: 49.3%
Current Account Balance, 2010: –1.3%
GDP Growth, 2010: 3.2%
Budget Deficit Ratio, 2010: –2.5%*

Last year wasn't kind to Mexico. Slumping oil revenue and lowered export demand from the U.S. hit the Latin American country hard. Rubbing salt into its wounds, international ratings agencies downgraded Mexico's debt late last year. Yet rising energy prices and a gradual rebound in exports have lifted the country's spirits, and its budget deficit is relatively mild. On Jan. 11, Mexico even raised $1 billion in a 10-year bond offering that was oversubscribed by 1.6 times.

* Domestic government estimate
Data provided by the International Monetary Fund and Standard & Poor's, unless otherwise indicated.

See the full list of Debtor

Nations.

War costs, while high, are small part of U.S. budget deficit

In the December 6, 2009 Miami Herald article "War costs, while high, are small part of U.S. budget deficit," David Lightman says the "wars in Iraq and Afghanistan are not the main reason the publicly held national debt has doubled since the 2001 terrorist attacks."

WASHINGTON -- President Barack Obama insisted last week that as the nation confronts record government debt and pressing economic needs at home, it cannot afford a lengthy, ambitious nation-building effort in Afghanistan -- but limiting U.S. involvement is unlikely to make much of a dent in the record federal debt.

Liberals complain the war has been a big contributor to the nation's budget problems, and are insisting some way be found to pay for the buildup.

But the wars in Iraq and Afghanistan, though they have virtually all been funded by deficit spending, are not the main reason why the publicly held national debt has more than doubled -- from $3.339 trillion to $7.709 trillion -- since the Sept. 11, 2001, terrorist attacks.

"It's a small part of the deficit,'' said Todd Harrison, fellow in defense budget studies at the Center for Strategic and Budgetary Assessments, a Washington research group.

That's not to say the war costs don't matter.

"Over the short term, we are certainly spending a large chunk of money of the wars, money that could be devoted to other priorities or for deficit reduction, at least once the economy improves,'' noted Josh Gordon, policy director at the Concord Coalition, a bipartisan research group devoted to fiscal discipline.

But over the long term, he stressed, "Our fiscal challenges are substantially larger, and just ending the wars would not change those projections -- because they all assume peacetime budgets.''

Obama last week said he would deploy an additional 30,000 to 35,000 U.S. troops to Afghanistan. This year's expected $30 billion to $40 billion price tag for that should boost the total cost of wars in Iraq and Afghanistan past $1 trillion over the last nine years, according to the nonpartisan Congressional Budget Office (CBO).

That spending accounts for only about one-fifth of publicly held debt accumulated in that time.

National defense spending accounted for 20.7 percent of the federal budget last year. While that's higher than peacetime lows of around 16 percent in the late 1990s, it's less than the 26-28 percent annual shares between 1975, when U.S. involvement in Vietnam ended, and 1992, when first the Cold War and then the 1991 Gulf War ended.

What's driven the bulk of this decade's deficit boom has been spending growth in programs such as Medicare and Social Security. Human resources, which include those and other domestic programs, consumed 63.8 percent of the budget last year, compared to only 49 percent as recently as 1990.

The antidote to high deficits, say independent experts, is making tough choices on domestic spending and taxes.

"The purpose of a budget is to set priorities and make trade-offs,'' said Susan Tanaka, director of citizen education and engagement at the Peterson Foundation, a New York-based fiscal watchdog group.

STILL COUNTING

Since the U.S. invaded Afghanistan shortly after the 2001 terrorist attacks, CBO estimates the U.S. has spent $943.8 billion through Sept. 30, 2009, to meet war and war-related needs, and could spend another $1.6 trillion over the next decade -- no small sum, indeed.

Other estimates put the cost higher: A 2008 study by Nobel Prize-winning economist Joseph Stiglitz and Harvard University professor Linda Bilmes dubbed the conflicts the "$3 trillion war.''

That figure appears consistent with current spending levels, since it assumes the U.S. will continue to spend on the war and related activities through 2019, a mission CBO estimates could cost $1.6 trillion.

Also adding to the cost is interest on war-related debt; that has totaled at least $100 billion.

Interest on future debt and other indirect costs are difficult to calculate, such as the cost of replacing equipment and providing benefits and healthcare to military veterans and families.

Direct war costs dropped in 2009, to about $154 billion, after reaching $187 billion in 2008. The administration had sought $130 billion in fiscal 2010; the defense spending legislation is still pending in Congress; that figure is now likely to grow by at least $30 billion.

A small band of congressional liberals insists that too much is being spent on the war, and that it's driving up the national debt.

War spending "has contributed to our economic crisis, exploded the lid off our national debt, and diverted funds from desperately needed domestic priorities,'' said Rep. Lynn Woolsey, D-Calif.

"We believe that if this war is to be fought, it's only fair that everyone share the burden,'' said House Appropriations Committee Chairman David Obey, D-Wis., who had pushed for a war surtax.

The surtax effort was seen as more a political than a fiscal initiative.

"Look at who's pushing this. It's people opposed to the war,'' said Roberton Williams, budget analyst at the Urban Institute-Brookings Institution Tax Policy Center.

House Speaker Nancy Pelosi, D-Calif., sensing scant support for the surtax, effectively killed the idea on Thursday.

DROP IN THE BUCKET

The war cost will help boost a federal deficit that CBO estimates will reach $1.4 trillion this year, roughly the same as last year, and add to a total national debt that now tops $12 trillion when including debt held in government accounts. But Obama's extra $30 billion is only a drop in the $1 trillion, $400 billion deficit bucket.

CBO sees huge deficits ahead. Its latest projections show even with stricter fiscal policies and a reviving economy, federal deficits are expected to total $7.1 trillion over the next decade, still reaching $722 billion in fiscal 2019 alone.

Those projections assume a continuation of current war policies. Should troop levels decline "significantly'' over a three year period, as Obama hopes, the cost would drop to about $1.1 trillion over 10 years, or roughly $140 billion a year, which would still leave large deficits.

Donations to Reduce the U.S. Public Debt

In the November 11, 2009 CNN Money article "Donating This Year? Uncle Sam Needs Your Help," Jeanne Sahadi reports that under a little-known law, the U.S. government accepts contributions to pay down national debt.

If you're irked by the U.S. debt, you can make tax-deductible contributions to pay it down. Fiscal year 2009 saw $3.1 million in donations. Only $12 trillion left to go!

You've probably heard about the country's giant debt load - $12 trillion and rising.

Did you know you can help reduce it?

Under a little-known law enacted in 1961, Uncle Sam accepts tax-deductible contributions to pay down the country's debt.

Not that the Treasury Department does much to publicize the program.

You can find it under the header "Accepting Gifts" in the U.S. Code. Or, if you're not an avid reader of dusty legal books, you can check the FAQ section on the Web site of the Bureau of Public Debt, an agency within Treasury. Or flip to page 91 of the IRS' 2009 Instruction Booklet for Form 1040.

Contributions made are typically small -- under $100. But there have been a few humdingers over the years.

The largest single gift ever made was in 1992 for $3.5 million, said Mckayla Braden, a spokesperson for the Bureau of the Public Debt.

For fiscal year 2009, all donations totaled just over $3 million. That's well more than what was donated in any single year in the decade prior. But it's far less than the nearly $21 million collected in 1994.

The money credited to the "Gifts to Reduce the Public Debt" account in theory reduces the amount of money the government has to borrow to finance its debt. But the dent is not deep or lasting.

"We might have to finance a tiny bit less that week," Braden said.

The Nuts and Bolts

So who are the folks who send Uncle Sam money of their own volition?

"Usually someone dies and leaves a gift. And many contribute regularly," Braden said. "On average, we get five donations a week."

Sometimes, she said, a large donation is made by an estate but is paid out over a number of years.

The names and addresses of the donors are not released. And blessedly, unlike most charities that reward you for giving by bombarding you with solicitations for more money, Uncle Sam will acknowledge your gift but then never bother you again.

There are two ways to give. One is to send a check directly to the Bureau of Public Debt, an agency within the Treasury Department. The address: Attn: Dept G, Bureau of the Public Debt, P.O. Box 2188, Parkersburg, WV 26106-2188.

The other is to include a check -- separate from any tax payment you make - with your federal income tax return.

Hate writing checks? You soon may be able to donate online. "We are going to make it very easy in the future to make gifts to reduce the public debt through PayPal on a regular basis," Braden said.

Would You Give?

CNNMoney.com's video team took to the streets of New York to ask random passers-by if they were aware of the program. No one was.

When asked if they'd contribute now that they know, the majority said that wouldn't be happening.

One woman put it this way: "They can use my tax dollars to do that and work it out." One man was a little more blunt. "Hell no. Hell no."

But others weren't so put off.

"I think I could give $10 to $20. And if everyone could do that it would make a good dent in the debt," another woman said. Another man figured he could "help the government out" with a hundred bucks.

Of course, with the national debt at $12 trillion, it would take more than a few $100 contributions to get back to even -- 120 billion of them, in fact.

Can You Spare a Trillion Dollars?

James Bowers, dressed as Uncle Sam, asks people if they can "spare a trillion", as they walk past him in the rain outside the front of Federal Hall, near the New York Stock Exchange, October 28, 2009. Photo: REUTERS/Chip East

The Irony of Tax Tea Party Protest Signs

It is common to see children carrying signs at tax tea party rallies to protest how government budget deficits are burdening future generations. The irony of this is that the the tax cuts advocated by the conservative Republican politicians they support (without commensurate reductions in government spending) are the primary cause of the dramatic increase in the public debt since 1980.

















There also seems to be a failure to understand the basics of macroeconomic policy. Economic declines are typically caused by a decrease in overall spending on newly produced goods and services, which economists call aggregate demand (AD). If consumers and businesses are unwilling or unable to increase spending during a recession or depression, government spending may be the quickest way to increase aggregate demand and reverse the economic decline. Deficit spending during economic downturns is an appropriate response if the goal is to lessen their impact. It is much harder to justify the deficit spending during the prosperous times of the past thirty years.

Most red ink ever: $9 trillion over next decade

In the August 26, 2009 article "Most red ink ever: $9 trillion over next decade," Associated Press writer Jim Kuhnhenn reports the new forecasts of upcoming U.S. federal budgets project larger deficits than previously expected:

WASHINGTON – In a chilling forecast, the White House is predicting a 10-year federal deficit of $9 trillion — more than the sum of all previous deficits since America's founding. And it says by the next decade's end the national debt will equal three-quarters of the entire U.S. economy.

But before President Barack Obama can do much about it, he'll have to weather recession aftershocks including unemployment that his advisers said Tuesday is still heading for 10 percent.

Overall, White House and congressional budget analysts said in a brace of new estimates that the economy will shrink by 2.5 to 2.8 percent this year even as it begins to climb out of the recession. Those estimates reflect this year's deeper-than-expected economic plunge.

The grim deficit news presents Obama with both immediate and longer-term challenges. The still fragile economy cannot afford deficit-fighting cures such as spending cuts or tax increases. But nervous holders of U.S. debt, particularly foreign bondholders, could demand interest rate increases that would quickly be felt in the pocketbooks of American consumers.

Amid the gloomy numbers on Tuesday, Obama signaled his satisfaction with improvements in the economy by announcing he would nominate Republican Ben Bernanke to a second term as chairman of the Federal Reserve. The announcement, welcomed on Wall Street, diverted attention from the budget news and helped neutralize any disturbance in the financial markets from the high deficit projections.

The White House Office of Management and Budget indicated that the president will have to struggle to meet his vow of cutting the deficit in half in 2013 — a promise that earlier budget projections suggested he could accomplish with ease.

"This recession was simply worse than the information that we and other forecasters had back in last fall and early this winter," said Obama economic adviser Christina Romer.

The deficit numbers also could complicate Obama's drive to persuade Congress to enact a major overhaul of the health care system — one that could cost $1 trillion or more over 10 years. Obama has said he doesn't want the measure to add to the deficit, but lawmakers have been unable to agree on revenues that would cover the cost.

What's more, the high unemployment is expected to last well into the congressional election campaign next year, turning the contests into a referendum on Obama's economic policies.

Republicans were ready to pounce.

"The alarm bells on our nation's fiscal condition have now become a siren," said Senate Minority Leader Mitch McConnell of Kentucky. "If anyone had any doubts that this burden on future generations is unsustainable, they're gone — spending, borrowing and debt are out of control."

Even supporters of Obama's economic policies said the long-term outlook places the federal government on an unsustainable path that will force the president and Congress to consider politically unpopular measures, including tax increases and cuts in government programs.

"The numbers today portend the biggest budget fight we've probably had in decades in the United States," said Stan Collender, a former congressional budget official.

The summer analyses by the White House budget office and by the Congressional Budget Office reached similarly bleak conclusions. The CBO's 10-year deficit figure was smaller — $7 trillion — but that is because it assumes that all tax cuts put into place in the administration of former President George W. Bush will expire on schedule by 2011. Obama's budget baseline, however, hews to his proposal to keep the tax cuts in place for families earning less than $250,000 a year.

Both budget offices see the national debt — the accumulation of annual budget deficits — as more than doubling over the next decade. The public national debt, made up of amounts the government owes to the public, including foreign governments, stood Tuesday at a staggering $7.4 trillion. White House budget officials predicted it would reach $17.5 trillion in 2019, or 76.5 percent of the gross domestic product. That would be the highest proportion in six decades.

Congressional Budget Office director Douglas Elmendorf said if Congress doesn't reduce deficits, interest rates are likely to rise, hurting the economy. But if Congress acts too soon, the economic recovery — once it arrives — could be thwarted.
"We face perils in acting and perils in not acting," Elmendorf told reporters.

David Walker, former head of the Government Accountability Office, said the numbers illustrated the need for a national commission that would review spending and taxing options and present lawmakers with a deficit reduction plan that Congress could approve or reject.

"We're going to have to do a hard course correction once we turn the corner on the economy," Walker, now president and CEO of the Peter G. Peterson Foundation, said.

Both Romer and Obama budget director Peter Orszag said this year's contraction would have been far worse without money from the $787 billion economic stimulus package that the president pushed through Congress as one of his first major acts.

At the same time, the continuing stresses on the economy have, in effect, increased the size of the stimulus package because the government will have to spend more in unemployment insurance and food stamps, Orszag said. He said the cost of the stimulus package — which spends most of its money in fiscal year 2010 — will grow by tens of billions of dollars above the original $787 billion.

The White House also credited the $3 billion cash-for-clunkers auto program for contributing to recent economic growth.

Orszag, anticipating backlash over the deficit numbers, conceded that the long-term deficits are "higher than desirable." The annual negative balances amount to about 4 percent of the gross domestic product, a number that many economists say is unsustainable.

But Orszag also argued that overhauling the health system would reduce health care costs and address the biggest contributor to higher deficits.

"I know there are going to be some who say that this report proves that we can't afford health reform," he said. "I think that has it backward."

At the same time, 10-year budget projections can be "wildly inaccurate," said Collender, now a partner at Qorvis Communications. Collender noted that there will be five congressional elections over the next 10 years and any number of foreign and domestic challenges that will make actual deficit figures very different from the estimates.

David M. Walker, the former Comptroller General of the United States, holds a B.S. degree in accounting from Jacksonville University.

Rising Public Debt May Be the Next U.S. Crisis

According to a July 3, 2009 article:

MOUNTAIN OF DEBT: Rising debt may be next crisis
By TOM RAUM, Associated Press Writer Tom Raum, Associated Press Writer Fri Jul 3, 5:02 pm ET

WASHINGTON – The Founding Fathers left one legacy not celebrated on Independence Day but which affects us all. It's the national debt.

The country first got into debt to help pay for the Revolutionary War. Growing ever since, the debt stands today at a staggering $11.5 trillion — equivalent to over $37,000 for each and every American. And it's expanding by over $1 trillion a year.

The mountain of debt easily could become the next full-fledged economic crisis without firm action from Washington, economists of all stripes warn.

"Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth," Federal Reserve Chairman Ben Bernanke recently told Congress.

Higher taxes, or reduced federal benefits and services — or a combination of both — may be the inevitable consequences.

The debt is complicating efforts by President Barack Obama and Congress to cope with the worst recession in decades as stimulus and bailout spending combine with lower tax revenues to widen the gap.

Interest payments on the debt alone cost $452 billion last year — the largest federal spending category after Medicare-Medicaid, Social Security and defense. It's quickly crowding out all other government spending. And the Treasury is finding it harder to find new lenders.

The United States went into the red the first time in 1790 when it assumed $75 million in the war debts of the Continental Congress.

Alexander Hamilton, the first treasury secretary, said, "A national debt, if not excessive, will be to us a national blessing."

Some blessing.

Since then, the nation has only been free of debt once, in 1834-1835.

The national debt has expanded during times of war and usually contracted in times of peace, while staying on a generally upward trajectory. Over the past several decades, it has climbed sharply — except for a respite from 1998 to 2000, when there were annual budget surpluses, reflecting in large part what turned out to be an overheated economy.

The debt soared with the wars in Iraq and Afghanistan and economic stimulus spending under President George W. Bush and now Obama.

The odometer-style "debt clock" near Times Square — put in place in 1989 when the debt was a mere $2.7 trillion — ran out of numbers and had to be shut down when the debt surged past $10 trillion in 2008.

The clock has since been refurbished so higher numbers fit. There are several debt clocks on Web sites maintained by public interest groups that let you watch hundreds, thousands, millions zip by in a matter of seconds.

The debt gap is "something that keeps me awake at night," Obama says.

He pledged to cut the budget "deficit" roughly in half by the end of his first term. But "deficit" just means the difference between government receipts and spending in a single budget year.

This year's deficit is now estimated at about $1.85 trillion.

Deficits don't reflect holdover indebtedness from previous years. Some spending items — such as emergency appropriations bills and receipts in the Social Security program — aren't included, either, although they are part of the national debt.

The national debt is a broader, and more telling, way to look at the government's balance sheets than glancing at deficits.

According to the Treasury Department, which updates the number "to the penny" every few days, the national debt was $11,518,472,742,288 on Wednesday.

The overall debt is now slightly over 80 percent of the annual output of the entire U.S. economy, as measured by the gross domestic product.

By historical standards, it's not proportionately as high as during World War II, when it briefly rose to 120 percent of GDP. But it's still a huge liability.

Also, the United States is not the only nation struggling under a huge national debt. Among major countries, Japan, Italy, India, France, Germany and Canada have comparable debts as percentages of their GDPs.

Where does the government borrow all this money from?

The debt is largely financed by the sale of Treasury bonds and bills. Even today, amid global economic turmoil, those still are seen as one of the world's safest investments.

That's one of the rare upsides of U.S. government borrowing.

Treasury securities are suitable for individual investors and popular with other countries, especially China, Japan and the Persian Gulf oil exporters, the three top foreign holders of U.S. debt.

But as the U.S. spends trillions to stabilize the recession-wracked economy, helping to force down the value of the dollar, the securities become less attractive as investments. Some major foreign lenders are already paring back on their purchases of U.S. bonds and other securities.

And if major holders of U.S. debt were to flee, it would send shock waves through the global economy — and sharply force up U.S. interest rates.

As time goes by, demographics suggest things will get worse before they get better, even after the recession ends, as more baby boomers retire and begin collecting Social Security and Medicare benefits.

While the president remains personally popular, polls show there is rising public concern over his handling of the economy and the government's mushrooming debt — and what it might mean for future generations.

If things can't be turned around, including establishing a more efficient health care system, "We are on an utterly unsustainable fiscal course," said the White House budget director, Peter Orszag.

Some budget-restraint activists claim even the debt understates the nation's true liabilities.

The Peter G. Peterson Foundation, established by a former commerce secretary and investment banker, argues that the $11.4 trillion debt figures does not take into account roughly $45 trillion in unlisted liabilities and unfunded retirement and health care commitments.

That would put the nation's full obligations at $56 trillion, or roughly $184,000 per American, according to this calculation.

___

On the Net:

Treasury Department "to the penny" national debt breakdown: http://tinyurl.com/yrxrsh

Peter G. Peterson Foundation independent assessment of the national debt: http://www.pgpf.org/

"Deficits do Matter" debt clock: http://tinyurl.com/l6mvjb

Burdening Future Generations

An editorial cartoon by Gary Varvel appeared on the Jacksonville Observer website on June 19, 2009. It depicts future taxpayers being burdened by a big government. I agree with the cartoon with a few modifications. The big government ship also should include the wars in Iraq and Afghanistan started by President George W. Bush, the fiscally irresponsible but popular prescription drug benefit pushed through by the Republican-controlled Congress in 2003, and the thousands of other government programs. And instead of just Barack Obama on the ship's bow, it also should include Ronald Reagan, George W. Bush, and most of the other politicians in Washington since 1981. That is when our culture of fiscal irresponsibility was established under the disguise of supply-side economic theory. See the "U.S. Public Debt Since 1940 - Adjusted for Inflation." Baby Boomers have been burdening future generations for decades.

Ronald Reagan´s Inaugural Address - 1981

In Ronald Reagan´s inaugural address on January 20, 1981, he claims:

For decades we have piled deficit upon deficit, mortgaging our future and our children's future for the temporary convenience of the present. To continue this long trend is to guarantee tremendous social, cultural, political, and economic upheavals.

Despite these warnings from the beloved Republican leader, the policies pursued in subsequent decades have dramatically increased budget deficits and the public debt.

U.S. Public Debt as a Percentage of Gross Domestic Product (GDP)

U.S. Public Debt as a Percentage of Gross Domestic Product (GDP)

Whenever a person applies for a loan, the bank (or other lending institution) requires the borrower to provide vast amounts of information on employment history, income, expenses, and other debts. The loan officer is trying to determine the likelihood that the borrower will pay back the loan. Loan officers acknowledge that the acceptable level of debt for an individual depends on that person´s wealth and income. A $10,000 credit card bill for Bill Gates (one of the wealthiest people in the world) is of much less concern than the same bill for an unemployed college student of modest means.

The same argument can be made for countries. As a country´s wealth increases, it is able to increase its debt and maintain the same perceived ability to pay it back. Thus, many analysts argue that the correct way to look at public debt is in relation to a country´s gross domestic product (GDP). Even by this measure, the U.S. public debt has increased dramatically since 1981.

See also the "U.S. Public Debt Since 1940" and the "U.S. Public Debt Since 1940 - Adjusted for Inflation".

Deficits & the Debt

Part 3: Deficits & the Debt

The following table contains estimates of U.S. government revenues and expenditures since 1948.

PRESIDENT
HOUSE
SENATE
Year
U.S. Government Revenues
(billions of dollars)
U.S. Government Expenses
(billions of dollars)
Budget Balance
(billions of dollars)
Federal Debt
(billions of dollars)
Truman (D)
Rep
Rep
1948
41.6
29.8
11.8
252.0
Truman (D)
Dem
Dem
1949
39.4
38.8
0.6
252.6
Truman (D)
Dem
Dem
1950
39.4
42.6
-3.1
256.9
Truman (D)
Dem
Dem
1951
51.6
45.5
6.1
255.3
Truman (D)
Dem
Dem
1952
66.2
67.7
-1.5
259.1
Eisenhower (R)
Rep
Rep
1953
69.6
76.1
-6.5
266.0
Eisenhower (R)
Rep
Rep
1954
69.7
70.9
-1.2
270.8
Eisenhower (R)
Dem
Dem
1955
65.5
68.4
-3.0
274.4
Eisenhower (R)
Dem
Dem
1956
74.6
70.6
3.9
272.7
Eisenhower (R)
Dem
Dem
1957
80.0
76.6
3.4
272.3
Eisenhower (R)
Dem
Dem
1958
79.6
82.4
-2.8
279.7
Eisenhower (R)
Dem
Dem
1959
79.2
92.1
-12.8
287.5
Eisenhower (R)
Dem
Dem
1960
92.5
92.2
0.3
290.5
Kennedy (D)
Dem
Dem
1961
94.4
97.7
-3.3
292.6
Kennedy (D)
Dem
Dem
1962
99.7
106.8
-7.1
302.9
Kennedy (D)
Dem
Dem
1963
106.6
111.3
-4.8
310.3
Johnson (D)
Dem
Dem
1964
112.6
118.5
-5.9
316.1
Johnson (D)
Dem
Dem
1965
116.8
118.2
-1.4
322.3
Johnson (D)
Dem
Dem
1966
130.8
134.5
-3.7
328.5
Johnson (D)
Dem
Dem
1967
148.8
157.5
-8.6
340.4
Johnson (D)
Dem
Dem
1968
153.0
178.1
-25.2
368.7

PRESIDENT
HOUSE
SENATE
Year
U.S. Government Revenues
(billions of dollars)
U.S. Government Expenses
(billions of dollars)
Budget Balance
(billions of dollars)
Federal Debt
(billions of dollars)
Nixon (R)
Dem
Dem
1969
186.9
183.6
3.2
365.8
Nixon (R)
Dem
Dem
1970
192.8
195.6
-2.8
380.9
Nixon (R)
Dem
Dem
1971
187.1
210.2
-23.0
408.2
Nixon (R)
Dem
Dem
1972
207.3
230.7
-23.4
435.9
Nixon (R)
Dem
Dem
1973
230.8
245.7
-14.9
466.3
Nixon/Ford (R)
Dem
Dem
1974
263.2
269.4
-6.1
483.9
Ford (R)
Dem
Dem
1975
279.1
332.3
-53.2
541.9
Ford (R)
Dem
Dem
1976
298.1
371.8
-73.7
629.0
transition quarter
Dem
Dem

81.2
96.0
-14.7
643.6
Carter (D)
Dem
Dem
1977
355.6
409.2
-53.7
706.4
Carter (D)
Dem
Dem
1978
399.6
458.7
-59.2
776.6
Carter (D)
Dem
Dem
1979
463.3
504.0
-40.7
829.5
Carter (D)
Dem
Dem
1980
517.1
590.9
-73.8
909.0
Reagan (R)
Dem
Rep
1981
599.3
678.2
-79.0
994.8
Reagan (R)
Dem
Rep
1982
617.8
745.7
-128.0
1,137.3
Reagan (R)
Dem
Rep
1983
600.6
808.4
-207.8
1,371.7
Reagan (R)
Dem
Rep
1984
666.5
851.9
-185.4
1,564.6
Reagan (R)
Dem
Rep
1985
734.1
946.4
-212.3
1,817.4
Reagan (R)
Dem
Rep
1986
769.2
990.4
-221.2
2,120.5
Reagan (R)
Dem
Dem
1987
854.4
1,004.1
-149.7
2,346.0
Reagan (R)
Dem
Dem
1988
909.3
1,064.5
-155.2
2,601.1
Bush (R)
Dem
Dem
1989
991.2
1,143.6
-152.5
2,753.6
Bush (R)
Dem
Dem
1990
1,032.0
1,253.2
-221.2
2,974.8
Bush (R)
Dem
Dem
1991
1,055.0
1,324.4
-269.3
3,244.1
Bush (R)
Dem
Dem
1992
1,091.3
1,381.7
-290.4
3,534.5
Clinton (D)
Dem
Dem
1993
1,154.4
1,409.5
-255.1
4,351.0
Clinton (D)
Dem
Dem
1994
1,258.6
1,461.9
-203.3
4,643.3
Clinton (D)
Rep
Rep
1995
1,351.8
1,515.8
-164.0
4,920.6
Clinton (D)
Rep
Rep
1996
1,453.1
1,560.5
-107.5
5,181.5
Clinton (D)
Rep
Rep
1997
1,579.3
1,601.3
-22.0
5,369.2
Clinton (D)
Rep
Rep
1998
1,721.8
1,652.6
69.2
5,478.2
Clinton (D)
Rep
Rep
1999
1,827.5
1,701.9
125.6
5,605.5
Clinton (D)
Rep
Rep
2000
2,025.2
1,788.8
236.4
5,628.7
Bush (R)
Rep
Dem
2001
1,991.2
1,863.9
127.3
5,769.9
Bush (R)
Rep
Dem
2002
1,853.2
2,011.0
-157.8
6,198.4
Bush (R)
Rep
Rep
2003
1,782.3
2,157.6
-375.3
6,573.7
Bush (R)
Rep
Rep
2004 estimates
1,798.1
2,318.8
-520.7
7,094.4
Bush (R)
Rep
Rep
2005 estimates
2,036.3
2,399.8
-363.6
7,458.0
Source - http://www.gpoaccess.gov/usbudget/fy05/sheets/b80.xls

The U.S. federal budget balance is the difference between U.S. government revenues and U.S. government expenditures.

U.S. federal budget balance =
U.S. government revenues – U.S. government expenditures

If the budget balance is positive, it is called a budget surplus. Thus, a budget surplus is an excess of government receipts over government spending.

If the budget balance is negative, it is called a budget deficit. Thus, a budget deficit is an excess of government spending over government receipts.

The public debt is the accumulation of deficits and surpluses over time. It includes all Federal debt held by individuals, corporations, state or local governments, foreign governments, and other entities outside of the United States Government less Federal Financing Bank securities. Types of securities held by the public include, but are not limited to, Treasury Bills, Treasury Notes, Treasury Bonds, United States Savings Bonds, State and Local Government Series, Foreign Series, and Domestic Series.

An estimate of the current value of the U.S. public debt is available from the U.S. Treasury.[7] As of November 24, 2004, the U.S. public debt was $7,517,849,423,608.38.

Having a large public debt increases the obligations of the federal government. The federal government must pay interest on the money it borrows. One way to reduce overall government expenditures would be to pay down the public debt.

U.S. Public Debt Since 1940 - Adjusted for Inflation

Here is the U.S. public debt since 1940 adjusted for inflation:

Adjusting the public debt for inflation provides a good account of federal government borrowing. The public debt increased in the 1940s to finance World War II. The public debt remained fairly constant from the late 1940s through 1981. This means the U.S. was reasonably responsible with its finances, collecting sufficient revenues to pay for government services. There is a slight increase in the 1970s. With the exception of a few years in the late 1990s, the U.S. government has increased its debt every year since 1981. Revenues have been insufficient to cover expenditures because government revenues have been reduced by tax cuts, but government spending has continued to increase. Most analysts attribute the reduction in the public debt in the late 1990s to the Congressional adoption of pay-as-you-go (PAYGO) rules. PAYGO required increases in discretionary spending to be accompanied by either tax increases or equivalent reductions in other government spending. After the election of President George W. Bush in 2000, the PAYGO rules were allowed to lapse in the House of Representatives and watered down in the Senate to facilitate the passage of tax cuts and the Medicare prescription drug plan, which former U.S. Comptroller General David Walker called "...probably the most fiscally irresponsible piece of legislation since the 1960s... because we promise way more than we can afford to keep." There was a subsequent dramatic increase in the U.S. public debt.

See also the "U.S. Public Debt Since 1940" and "U.S. Public Debt as a Percentage of Gross Domestic Product (GDP)".

U.S. Public Debt Since 1940

Here is the U.S. public debt since 1940:
In the first 200 years of U.S. history, the total net amount of money borrowed by the government was less than $1 trillion.
In the subsequent 33 years, government borrowing increased the debt by more than $10 trillion. There was relatively little debt prior to 1940. Government borrowing increased significantly in the 1940s to finance U.S. expenses related to World War II.

See also the "U.S. Public Debt Since 1940 - Adjusted for Inflation" and "U.S. Public Debt as a Percentage of Gross Domestic Product (GDP)".