2. A lot of Americans are wanting to know
the answers to some basic questions
related to the USA debt. What is the US
debt and how much is it?
From the point of view of an actual
number, the total amount of US debt, as
of October 1, 2012,is in excess of $16
trillion, ($16,073,600,000,000). This
number is defined as the US National
Debt. What this means is that the US
Government has spent $16 trillion more
money than it is has received in income.
The US Government revenue is mainly
composed of federal income tax revenue,
both from individuals that pay their
federal income tax as well as from
corporations and companies, that pay
federal corporate income taxes.
3. What does the $16 trillion of US debt mean to the
average man in the street? It should be of grave
concern to all US citizens that the USA debt is
over $16 trillion. Just like any debt that an
individual has, the US debt has to be repaid at
some point in time. How would this debt be repaid?
It is only possible to repay this debt, is firstly
to not increase the debt any further to start with,
by ensuring that government expenses do not exceed
the federal revenue. Secondly to start ensuring
that a surplus of income over expenses occurs
(known as a budget surplus) and continues year
after year. For each year that there is a budget
surplus, the surplus is used to pay off the US
debt.
4. There are two ways of creating this scenario,
the first is to reduce expenditures and
secondly is to increase revenues. Easier said
than done. Reducing expenses seems straight
forward enough. Increasing revenues is not that
obvious. The key to increase federal income is
to grow the economy, resulting in increased
revenues for businesses and therefore greater
levels of employment by businesses, thereby
increasing the amount of taxes paid by both
individuals and corporations.
5. How much surplus and for how long are those surpluses
required in order to eradicate the US debt of $16
trillion? Historically, the largest US government
budget surplus ever was a touch less than $250 billion
(a quarter of $1 trillion). Therefore, if you assume it
is possible to repeat the very best over and over, year
after year, then the soonest one could expect the $16
trillion of US debt to be repaid would be 4 (4 times
$250 billion equaling $1 trillion) times 16 years,
which makes 64 years. No, that's not an arithmetic
error, it is a fact that unfortunately, at the very
best it would require a minimum of 64 years of
continuous record surplus, to pay of the $16 trillion
of US debt. Are you still unsure of the answer to the
question, what is the US debt and what does it mean to
you?
6. It means the challenge facing the US and the
citizens of America is unprecedented and is going
to require drastic cuts in government expenditure,
but more importantly, somehow the economy has to
grow at previous record levels relentlessly for 64
years without any dips. Alternatively, the economy
somehow has to grow at rates never ever before
seen in history and needs to grow at those rates
for an unprecedented length of time. All of which
is unrealistic to expect, so the reality is more
likely that the US will slowly but surely head
towards bankruptcy over the next 50 years or so.
