Most folks really couldn’t absorb what $20 trillion of U.S. debt meant in the 2016 Presidential election cycle. I’d venture over $30 trillion now really doesn’t feel different. It’s still huge. But that’s just one word. “Huge”.
I thought it would be more useful to see what the amount we owe as a nation is sized for each person. Even the next infant born. So I took the actual U.S. debt outstanding starting in 1930 and converted it into April 2022 dollars to remove the impact of inflation. Then I divided by the population. Population statistics can vary a bit, depending upon the source. But they are pretty similar for a particular year. Frankly, the picture remains the same.
As the table in the link below shows, the debt burden carried by each man, woman, and child in 1930 was $2,236 in today’s dollars. In sharp contrast, new infant citizens of this country are born into a debt burden of over $90,000.
There are many more government programs and services than in 1930. An increase should be expected.
But as the burden grew, at some point one can question how much can be shouldered by these young future taxpayers. The truth is that it’s those who pay taxes who pay the ongoing interest payments to our creditors both here and abroad (like China, Russian, and Saudi Arabia). A family of four’s share of the debt is $363,000. That might be comparable to a mortgage. Paying interest on that amount at around 3% amounts to around $11,000 per year. That’s in addition to feeding the family, having a roof over their heads, and the cost of transportation.
Don’t rely on the credit rating agencies to publish a reliable indicator of the U.S.’s credit quality. Standard & Poor’s had the temerity to downgrade the U.S. credit rating one notch in 2011 and was attacked by government officials for speaking out. In 2011, U.S debt was over 90% of GDP and exceeded 100% of GDP by 2015. By 2020 it was 134%. But who’s counting? Being a former rating agency Senior Credit Officer, I find it hard to not laugh about the issue. Robin Williams said all humor is ultimately about pain. This is painful to observe and contemplate.
Here’s the link to the table. At least be aware. And don’t be surprised…