Uploaded byPreeti Gulati
Preeti
The US has carried debt since the Revolutionary War, with amounts fluctuating over time based on wars and economic conditions. Debt increased dramatically due to the Civil War and World Wars, reaching $1 trillion in 1982 and surpassing $5 trillion in 2000. The national debt has risen due to factors like military spending, recessions reducing tax revenue, and social programs increasing spending. A high debt level relative to GDP can increase interest rates, taxes, and fiscal deficits while slowing economic growth. Suggestions to recover include making American companies more competitive, restricting strategic asset sales to foreigners, and revising trade policies to better serve US interests.
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Preeti
- 1. History of US Government Debt PREETI GULATI http://fellowshipofminds.files.wordpress.com/2011/08/liberty-in-tears.gif
- 2. Debt in the19th century • The U.S. has had debt since its inception. Records show that debts incurred during the American Revolutionary War amounted to $75,463,476.52 by January 1, 1791. • The National Debt in 1816 was $127 million • Andrew Jackson reduced the National Debt to zero (or virtually zero) in 1835 • The National Debt in 1839 was $10 million • The National Debt in 1851 was $68 million • The National Debt in 1866 was $2.77 billion • By 1891 the National Debt had fallen to $1.546 billion (the lowest it was from the Civil War to World War I)
- 3. Debt in the20th century • The National Debt in 1919 was $27.4 billion • The National Debt in 1930 was only $16.2 billion • By 1946, the National Debt was $269.4 billion • 1957 was the last year – in the data set examined in class – the National Debt fell. It was $270.5 billion that year. • 1963: $305.9 billion • 1972: $427.3 billion • 1975: $533.2 billion • 1982: $1.14 trillion • 1986: $2.13 trillion • 1992: $4.06 trillion • 2000: $5.67 trillion
- 5. What is DebtGDP Ratio ? • A measure of a country's federal debt in relation to its gross domestic product (GDP). By comparing what a country owes to what it produces, the debt-to-GDP ratio indicates the country's ability to pay back its debt. • The ratio is a coverage ratio on a national level. http://img.ibtimes.com/www/data/images/full/2011/08/02/142310-financial-crisis-u-s-debt-ceiling-in-pictures.jpg
- 6. What Causes thenational debt to rise? • Debt occurs when government revenue (primarily from taxes) is less than government spending. • Therefore debt will rise whenever.. • revenue falls: this happens when the economy goes into recession and when we decide to cut taxes • spending increases: this can happen when we go to war
- 7. REASONS BEHIND USDEBT WORLD WARS MILITARY EXPENSES GOVERNMENT SOCIAL SPENDINGS DEPRESSION http://www.hurriyetdailynews.com/images/2011_07_25/us-debt-ceiling-brinkmanship-rattles-investors-around-globe-2011-07-25_l.jpg
- 8. What does thefederal government spend money on? • National Defense: 26.3% • Health Care: 24.3% • Job and Family Security: 21.9% • Everything Else is less than 30% • everything else includes education, veterans benefits, national resources, foreign aid, NASA, Immigration, response to natural disasters, and interest on the debt. The biggest expenditures of the federal government are Social Security, Medicare and Medicaid, and National Defense
- 9. Military spending aroundthe world http://www.sipri.org/research/armaments/milex/factsheet2010
- 10. Implications • HIGH INTEREST RATES •MORE AND MORE TAXES •AFFECT ECONOMIC GROWTH •INFLATION •FISCAL DEFICIT •DEVALUATION IN DOLLAR http://markhalperin.files.wordpress.com/2010/12/moneycash.jpg?w=590&h=386&crop=1
- 11. SUGGESTIONS TO RECOVER •American owned companies have lost their edge and, on balance, are not as productive or as protective as many other foreign companies. This must be corrected. • Prevent the sale of strategic companies or institutions to foreign ownership •Change the tax structure for select industries that are vital to strategic American interests – steel, transportation, cement and others. •Free trade has been a disaster. It must be replaced with intelligent trade that prevents foreign predatory practices and better serves U.S. interests. http://nrzresources.com/wp-content/uploads/2011/06/jpg_groupe_doux_finance2-3-2-1.jpg
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