Talk:United States public debt

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I am confused by the description below the first figures. If the difference between the public debt and the gross debt is that the gross debt _excludes_ things (presumably included in the public debt, as the difference is being cited) how can the gross debt be larger? Are the things excluded not an obligation, but actually a credit? —Preceding unsigned comment added by 99.254.70.186 (talk) 23:08, 24 March 2008 (UTC)

oops..I understand now...it excludes _funds_...got it. Sorry for the confusion. 99.254.70.186 (talk) 23:10, 24 March 2008 (UTC)

Contents

[edit] in the event of a surplus

I am new to wikipedia, sorry if this comment is not appropriate, or too ignorant for this forum.

What would the US government do if it were to eliminate the budget deficit, thus running positive net cashflow, effectively rendering the US government a profitable institution. Alan Greenspan discussed this possibility briefly in his recent book, and used this "frightening" prospect as justification for endorsing the Bush tax-cuts. Indeed, tax cuts have been the conventional method for diffusing excess govt revenue. But is a tax cut the most efficient use of capital? Could the US Government become the worlds biggest investment bank? Who would decide where or how the US government allocates its capital? Could it issue equity? on public stock exchanges?? what would stop politicians from going about buying out the world's assets? is the current system of checks and balances strong enough to avoid the potential catastrophy of Congress and the President being in control of trillions of dollars. The current system is that congress reserves the right to 'earmark' federal money to political benificiaries and friends, as well as tax cuts. Is there any ongoing discussion about whether this is really the most efficient way of distributing capital??

Doug —Preceding unsigned comment added by 41.210.24.246 (talk) 21:51, 12 January 2008 (UTC)

That seems highly unlikely and is beyond the scope of this article at any rate. Prestonp (talk) 01:59, 13 January 2008 (UTC)

[edit] quibbles

Hello $9 trillion. —Preceding unsigned comment added by 149.159.113.25 (talk) 13:45, 7 September 2007 (UTC)

Yes, that $9tril is what I've read & is shown in a table, mid-way in the article. However, the first paragraph lists a much smaller figure. If that figure is to be used, the discrepancy of public vs intergovernmental transfers (i.e. S.S.) should be explained. 68.180.38.41 21:11, 9 November 2007 (UTC)

As it says in the article, $5t is the debt held by the public. $9T is the $5T figure plus the intragovernment amount of roughly $4T. Prestonp 00:34, 11 November 2007 (UTC)

[edit] Major Error

The chart for this page shows total debt as a percentage of GDP, not public debt. The public debt as a percentage of GDP is much lower, around 40%. See http://www.aaas.org/spp/rd/debt04b.pdf for some accurate data for both total debt and public debt.


Yes. In the section entitled "A Brief History of the Debt," the table with columns entitled "US Public Debt USD billions" and "% of GDP" apparently shows data for the Gross Debt, not the Public Debt.Scot008 (talk) 17:54, 20 February 2008 (UTC)

[edit] China's Nuclear Option

There is no such thing as "China's Nuclear Option" and it has rightfully been deleted from this article. It is an internet rumour found only on fringe chat boards. There is no article citing this as a real option in reputable media sources.--24.15.249.123 18:58, 14 September 2007 (UTC)JasonW

I have heard of China using the threat of selling of it's bonds from other author's. It's common sense really. They've paid a lot for that particular stick and it continues to lose value through inflation the longer they hold it and do nothing. Prestonp 17:15, 14 August 2007 (UTC)

This is not correct. There is no official campaign of threat of selling bonds and it didn't start in August (The article was published in August), the original writer simply posted it because he read it from that article. Also, it is not described as the "Nuclear Option" in the state media, it was described as that by the author of the article. If you wish to put this in, please rewrite it and discuss the possibilities of China using it's reserves against the U.S., but until then please do not continue to revert this secion. —Preceding unsigned comment added by IP address (talk) date

The article provided is a citiation by a reputable source saying that "Described as China's "nuclear option" in the state media,". So, unless you can provide some citations to back up your claims, I don't see why any rewrite is necessary. Prestonp 01:45, 15 August 2007 (UTC)

http://www.chinadaily.com.cn/bizchina/2007-08/13/content_6023228.htm

It has been rebuked by Chinese state media. China has not threatened to sell off dollars and bonds and there is no official campaign to threaten the U.S. —Preceding unsigned comment added by 210.84.9.134 (talk) 15 August 2007

It also strikes me that the difficulty in such a threat is that if China's holdings are significant enough to be a real risk (and here the TIC data and data on daily Treasuries trading volume are useful), that it would be difficult to unwind a position fast enough to beat the collapse in prices. That is, China could sell part of their position, but in so doing, they would wipe out the remaining value of their portfolio that could not be sold in time. If the collapse does not follow the unwinding of their position, then no real nuclear option existed. In fact, nuclear is a good analogy, since fallout is likely to rain back on the initiator of the action.Vajs 01:20, 28 August 2007 (UTC)

Very true. Essentially US Bonds are not a liquid asset for China and I'm sure they probably realize that just as I'm sure they know that the bonds are not in and of themselves a good investment. However by buying US bonds it drives the dollar up in comparison to the yuan which is part of their whole game plan in terms of trade. If we up and decide we're not trading with them anymore, they really have no need for the things. Prestonp 22:30, 29 August 2007 (UTC)
Oh man, talk about fear mongering to the extreme. If the dollar drops, China could lose trillions in foreign reserve! They will never let that happen. The old saying are still true: "if you owe the bank $100, that's your problem. If you owe the bank $1 million, that's the bank's problem". 24.89.245.62 02:27, 15 September 2007 (UTC)
that is not true, you must compare if the lost of USD 1.4 trillion is worth the damage of keeping it. USD is falling anyway, it is not like China expect to be able to recollect the money anyway! also China is not short on money, it doesn't need USD because the US is not willing to sell China anything useful anyway... if China itself is under risk, it wouldn't care about 1.4 trillion dolar. what is more important, your life or your money? this is seriously enough for the fed to travel to china to reassure them last christmas. the fact is even if china doesn't sell out, that it just stop the 1 billion dollar it is pumping into the reserve DAILY! USD will crash. it cost china as much money to keep USD everyday as if it was to just give it up.
"However by buying US bonds it drives the dollar up in comparison to the yuan which is part of their whole game plan in terms of trade." correct, but China does has alternative to keeping the yuan peg, it can divest to European market, middle east and the rest of asia. to keep the yuan at the same value, you just need to grow your foreign reserve at the same rate as the demand of yuan, it doesn't mean USD is the only market you can invest into. i wouldn't be surprise to learn that China is secretly building foreign reserve in other currency now. Akinkhoo (talk) 00:15, 21 February 2008 (UTC)

If there were such a thing as a "China Nuclear Option," it would be best described as Beijing assuming the (later abandon) role of Chairman Greenspan. Dr Alan, back in the early 1990s, threatened to raise interest rates if the budget deficit wasn't brought under control, and so it was. Get the federal budget under control, and there would be no need for anyone to threaten to sell T-bills. DOR (HK) (talk) 06:11, 4 June 2008 (UTC)

[edit] CItations

I am currently taking courses in Intermediate Micro and Macro Economics and will add the appropriate textbook citations to whatever area people feel are weak. You can just post it here and not delete them wholesale. Prestonp 05:00, 7 September 2007 (UTC)

We don't need more students contributing from textbooks or from what they learned in class today. If you can't find sources in reputable mainstream media sources, it doesn't belong on Wiki. --24.15.249.123 18:59, 14 September 2007 (UTC)JasonW

Jason. First off, you're wrong. College textbooks related to the subject are more authoritative than a main stream article in terms of theory. Secondly, you display really bizarre behavior coming in with a flurry of reference free editorializing and then disappearing for a while refusing to discuss it. Prestonp 20:48, 14 September 2007 (UTC)

College textbooks are a waste of time and written with a political bias based entirely on theory, not reality. In any event, whatever under-educated teengers in school think, opinions are irrelvant. Cite written sources. Personal opinions are of zero value. No sources, and it will be removed. --Jasoncward 21:21, 14 September 2007 (UTC)JasonW

Jason, you seem to feel that your opinion needs no citation and is somehow free of bias. You are mistaken. I have reverted your edits and issues a warning. Prestonp 22:54, 14 September 2007 (UTC)

Issue all the warnings you want. There are NO OPINIONS in my version of the edit. Your [professor's] opinions, your errors, and your sloppiness belong no where in Wikipedia:

- the idea that social security, medicare, and personal debt should be included in the well-established definition of national debt

- an uncited "intragovernmental debt" figure of 9 trillion in the first week of September

- The "China Nuclear Option" is a complete idiocy which cites a dead link - you learned one day from the same source - your college professor. and this is not a mainstream idea, it is not even part of any rational discussion, and worst of all, IT IS A HYPOTHETICAL and an idea REJECTED by the Chinese government itself

- wording like " Replies to arguments against paying down the debt", which indicates poor written English skills, is a double negative, and is better written as "Reasons to pay down the debt"

- US DEBT IS OVERWHELMINGLY OWNED by Americans, and foreign ownership of US debt is DECLINING, as you are so happy to mention with regards to Japan, China, Kuwait, etc... yet you insist on reverting to your politically spinned phrase that it is "increasingly not true" that Americans owe the debt to themselves.

- The discussion of Sweden, Kuwait, etc... is misleading; no country "abandoned" the dollar, they simply VERY SLIGHTLY reduced their dollar holdings, in the case of Sweden the dollar formerly held 90% of their foreign reserves, and now it holds 85%

If you want to propel your political beliefs given to you by your economics class, kindly build a website. Your personal situation is driving this problem: you discovered economics in a class you're in, you think your professor is a genius, and you feel that you are among a tiny minority who have discovered things no one else in the world knows...in actuality you are merely repeating opinions given to you by others to forward their political beliefs.

This subject is almost purely FACTUAL, any opinions or hypotheticals you want to provide can only be included if they are mainstream, documented by multiple sources, and, most of all, PRESENTED WITH THE OPPOSING VIEW POINT AS WELL. Mainly, the opinions, hypotheticals and the re-definition of 'national debt' belong no where in wiki. But, even though I think most of what you written is 100% POV and original research, we can go line by line through the problems in this discussion. --24.15.249.123 23:16, 14 September 2007 (UTC) JasonW

Dear Jason, the citation for US debt being $9 Trillion is right here. [[1]] Various world government's abandoning pegging their currency to the US Dollar constitues far more than a "slight reduction in dollar holdings." In response to your criticism of various people posting their political beliefs here, all I can say is that that is a case of the pot calling the kettle black. I do appreciate that you stopped making a flurry of edits all at once. In response to your idea that the amount of US public debt being held by foriengers is going down, I'd invite you to bring a citation of your own. Prestonp 23:57, 14 September 2007 (UTC)
JasonW, foreign reserve is not the same as debt. Akinkhoo (talk) 00:49, 21 February 2008 (UTC)

[edit] Graph

What is the source for the graph on this article? Using the GDP numbers from here, I come up with:

2000: $5,674.2 bil Debt / $9817.0 bil GDP = 54.8%

2006: $8,506.9 bil Debt / $11319.4 bil GDP = 75.2%

This should look more like sudden spike, however the graph shows just a small bumb. What source is the graph using? Neitherday 03:53, 23 September 2007 (UTC)

If the graph can't be sourced, I move that it be removed as possibly misleading. Neitherday 22:34, 24 September 2007 (UTC)
I'm removing the graph as misleading and POV. If anyone can explain why it is not, they can always readd it to the page. Neitherday 00:12, 26 September 2007 (UTC)

Hi Neitherday, I'm the one who made that graph. I used those same GDP values from EH.net -- and have now added the source data to the image page. (You're right -- I should have included source data in my first version!) But note that the relevant GDP values must be nominal, not real. Federal debt values are given in nominal values, and must be compared with nominal GDP values. So the value for 2000 is $5,674.2 bil Debt / $9817.0 bil GDP = 54.8% while for 2006 it is $8,506.9 bil Debt / $13194.7 bil GDP = 64.5%. This is exactly what the graph shows. Also, if you have problems with a graph, why not contact the person who made the graph? Let me know if you have any other questions. Citynoise 13:34, 7 October 2007 (UTC)

[edit] NYC Debt Clock

Is it too much to ask for to provide more current stats for the national debt. Just a few hours ago I stood in front of the NYC Debt clock and took a picture valueing the national debt at nearly $8.895 Trillion, with the Family Share at $96,782. That's a large disparity compared to the end-of-2006 stats currently stated. Alan 24.184.184.177 05:30, 25 September 2007 (UTC)

Can someone add a picture of this supposed debt clock because I think they're referring to the clock that is on the South end of Union Square. It counts in military time, down to the tiniest fractions of seconds. —Preceding unsigned comment added by 70.112.190.54 (talk) 06:01, 22 January 2008 (UTC)

The Debt Clock is in Times Square, not Union Square. Made fix and added ref.Sam (talk) 18:21, 23 January 2008 (UTC)

why do these graphs never go back to before 1913, when control if the money supply was usurped by the federal reserve? i believe the national debt was quite small before they began to steal everyone's money. —Preceding unsigned comment added by 91.110.12.229 (talk) 15:43, 8 May 2008 (UTC)

[edit] Fraction of GDP

 Please help improve this article or section by expanding it.
Further information might be found on the talk page or at requests for expansion. (November 2007)

The statistics presented here need to be put in context of what percentage of GDP a given level of debt in a given year represents. -- Beland 22:00, 11 November 2007 (UTC)


[edit] Percentage of Interest Paid by the National Budget

I would think that the more important figure would be what percentage of the yearly budget is paid to the interest of the national debt.--84.154.94.25 04:33, 13 November 2007 (UTC)Jahns

This $318 billion conclusion should be further explained, as the information is not available at the provided reference link:

  • In 2003, $318 billion was spent on interest payments servicing the debt, out of a total tax revenue of $1,952 billion. (Unsigned Comment)

[edit] The calculation

In 2006 the tax revenue was $2,518 billion.[2] According to National debt by U.S. presidential terms, spending that year was $2,655 billion (i.e. $137 billion deficit). The national debt that year increased from $7,905 billion to $8,451 billion (i.e. $546 billion). Therefore the interest on the national debt must have been $409 billion by my calculations (and I am by no means an expert). This site gives $406 billion. This would represent 16.1% of the total tax revenue. Corleonebrother (talk) 21:23, 26 February 2008 (UTC)

[edit] Table in section 'A brief history of the debt' has unverifiable figures

The table in the section 'A brief history of the debt' provides figures for the US national debt (total = public + government held debt) not only in US dollars, but in Euros and 'ounces of gold.' The figures denominating the US debt into euros and 'ounces' of gold are unreliable and invalid.

The euro numbers are unreliable for two reasons. First, the exchange rate used to convert US dollars to euros is not specified either in the wikipedia entry or on the webpage cited as the source of the exchange rate. Second, the date the exchange rate was valid is not specified. Therefore, the figures denominating the US debt into euros are unverifiable since the rate used for the calculation and the date it was valid are not provided.

Moving onto gold: First, there are several different mass units called an ounce: English units, Imperial units, United States customary units, Troy ounce, etc. The specific ounce being used is not specified and should not be assumed to be the customary Troy ounce. Second, the price of gold relative to the dollar fluctuates daily, and the spot price used to convert between dollars and the aforementioned unknown reference ounces of gold is not given. Third, the date on which the spot price was valid is not given. Therefore, the figures denominating the US debt into 'ounces' of gold are unverifiable since the units and prices used are not provided so the calculation cannot be checked.

This is not a personal attack on whoever put those figures up. Personally, I applaud the thoughtfulness and effort that was put into the work, but without explicitly stating the exchange rates, spot prices, dates and system of measurement used for the calculations the figures produced are meaningless and are not verifiable.

I'm deleting the euro and gold figures for the above reasons. Furthermore the calculations of these figures may be viewed as original research.

Mtiffany71 (talk) 23:16, 18 November 2007 (UTC)

[edit] Consequences of Foreign Countries Owning U.S. Debt

This section doesn't explain what the consequences are. It only mentions that foreign countries do indeed own a substantial amount of our debt. Either expand, or change heading. ydesai2008 23:57, 25 November 2007 (UTC)

[edit] Arguments against paying down the national debt

I removed a series of debdt pay-down periods and the following recessions. Three reasons:(1) There was not a good source; (2) Before world war II, there was no good understanding of how a central bank should operate, so who knows how many silly things they were doing without a really great analysis; (3) the ideal fiscal policy dictated by current thought on deficit spending is that the debt should be paid down when the economy is good, then the economy will eventually go south, and the debt should be increased--so if the economy causes the debt to change, it will look like the other way around to an observer who doesn't realize who's changing things and which is just hapening (you could say the same thing about a car--turning the car is associated with turns in the steering wheel--thus the car turning causes steering wheel changes.) Pdbailey (talk) 02:29, 30 November 2007 (UTC)

PDBailey, the argument you are making seems largely hersay. There are good arguments for paying down the debt, which is present in that section, which is well cited. Prestonp (talk) 00:28, 16 December 2007 (UTC)
Prestonp, I can't make sense of your claim, can you explain it? The word, hearsay regards something one person says to another and the second person repeats the same in a court. I'm not sure where the court is, or who said something to me. In addition, my main point was the first, ("There was not a good source"), I guess this is something that I saw on the main page and then repeated here, but the claim of hearsay becomes a little nonsensical, don't you think? Pdbailey (talk) 16:31, 24 January 2008 (UTC)
No, I think it was a fine use of the word. Wikipedia being the metaphorical court and the statement that "before world war II, central banks had no good understanding of how a central bank should operate" being the statement which someone must have told you which you are now introducing as a factual argument that needs no support. Incidentally, you are citing Keynesian economics as gospel and there is no clear agreement that it is the job of a central bank and government to use counter-cyclical spending policies. Prestonp (talk) 04:15, 26 January 2008 (UTC)

[edit] Innaugulation

I've never heard of this word before (please forgive me, I'm not an econ guy). It doesn't show up on dictionary.com. Google has 4 hits. This article, another site in which it is used in the same exact sentence, and two sites where it appears to be a mistaken spelling of "inauguration." Might someone explain that word in this article, create a new article for it, or yank it?

I did a search on EconLit (the main database for economics articles) and even "currency and exportation" gave no English language hits. So I yanked lots of what looked like babel to me. Without a reference, I can't tell if it's made up or not. Pdbailey 13:31, 30 November 2007 (UTC)

[edit] References hyperlinks are all raw html/broken

On Dec 1,2007, the references section hyperlinks are not displaying properly. All the raw html is showing and no links. Tried to go in an edit to see what might be wrong, but it was not obvious to me. I remove an extra <references/> that was still there in between the Reflist tag and that seemed to fix it.

[edit] CIA lies?

If you look at the CIA World Factbook (https://www.cia.gov/library/publications/the-world-factbook/rankorder/2186rank.html) US national debt, as of 2007 is 36.80% of GDP...a rather remarkable drop and down to the level when Bush Jr came to power. Any guesses for this? 62.56.107.49 (talk) 14:31, 23 January 2008 (UTC)

There are many ways to measure both debt and gdp. Which measure you choose impacts the results. For a change that big I'd say they were not consistent year to year in which variables they used. 24.222.54.66 (talk) 16:09, 24 January 2008 (UTC)

If you look at the graph in the next section, you will see where this result is from (public debt per gdp) so it neglects the Social Security trust fund (among others). It might make sense for comparability between nations for the CIA to do accounting this way. Pdbailey (talk) 02:14, 4 February 2008 (UTC)

some part of the factbook is not very accurate or always up-to-date. i don't see any lies; you can find mistake on many countries on it, it is more likely that the factbook is maintain by a fairly small crew who gather data from newspapers and such. i doubt they are allow to use internal material from CIA as source as that would be a security risk. Akinkhoo (talk) 00:58, 21 February 2008 (UTC)

[edit] Images

Does anyone think the two images, Image:US Public debt per GDP 1791-2006.svg and Image:USDebt.png, are redundant? I prefer the former, because it is given as a percentage of GDP. Also, the latter should be remade as an SVG. Superm401 - Talk 10:31, 27 January 2008 (UTC)

Yes they are, and yes I favor the one that features the percentage of GDP. Prestonp (talk) 21:25, 27 January 2008 (UTC)
I'm most disturbed by the difference between them (why does the svg have a dip near 2000 while the png doesn't?) It would be nice if Image:US Public debt per GDP 1791-2006.svg listed the source of the data. Pdbailey (talk) 00:09, 4 February 2008 (UTC)
If you read the description, it tells you there is a slight discrepancy in the calculations from using Fiscal year debt data, and calendar year GDP. It's probably necessary in order to maintain consistency with the year-fixed early historical estimates used for GDP. As a broad guide it could be of considerable value to readers. I placed it under one of the subheadings. 216.165.199.50 (talk) 08:17, 7 February 2008 (UTC)

I updated the old image to (a) include the fraction of gdp data, (b) include public and gross debt, (c) use a deflator for the dollar denominated debt. the result is still at Image:USDebt.png. I'm also going to replace the existing because of (c) unless others object. Pdbailey (talk) 02:11, 4 February 2008 (UTC)

[edit] surplus = govt takes in more money than it pushes out

I just removed this:

Paying down the federal debt requires the federal government to run a federal surplus. "Federal surplus" means the economy sends more money to the government than the government sends to the economy, thus reducing the amount of money in the economy. This reduction of money in the economy reduces the amount of lending funds.

When the government pays down the debt, it does so by paying back more bonds than it sells, so that it is putting more money in the economy. The flip side of this (as is noted above) is that it is taxing more than it is spending. In the strictest sense, the net is a wash.Pdbailey (talk) 02:45, 18 February 2008 (UTC)

[edit] Quoting speculation

Despite the drawbacks of making future projections, however, a responsible government must arguably make long-run projections so it can prepare the country for future possibilities. The federal government does provide long-run budget projection in Table 13-2 on page 209 of the Analytical Perspectives of the 2006 U.S. Budget. It projects that the federal debt held by the public will reach 249 percent of GDP in 2075. This is more than double the maximum reached during World War II and nearly four times its current level. Most of this increase is due to projected increases in entitlement spending and the resulting interest on the debt. It is worth noting that this is a projection, not a prediction. This projection assumes normal economic conditions and that government policies will follow current law. The stress of a quadrupling of the debt would likely cause one or both of these items to change.

I cut this out because it's ridiculous to treat this projection as if it were grounded in any physical reality. Our %debt has never been 249% of GDP and probably never will be without a catastrophic collapse of the nation-state. Any slightly rational individual can look at the graphs on this Wiki-page and see that this projection is meaningless. Projections like this aren't facts, they're speculation, and not very good speculation at that. Quoting someone else's speculation doesn't legitimize it. To use some extreme examples, everyone would theoretically run off a road if steering wheels were arbitrarily locked into some position while driving. As we all know, sane/healthy drivers are always adjusting the steering wheel to keep their cars on the pavement. More humorously, if someone had taken my rate of growth at 13 and tried to extrapolate that to the age of 40, he would have predicted that I was going to be taller than a tree. Even quoting such asinine predictions is a waste of time and bandwidth, and certainly not good enough for a Wiki.

[edit] GDP?

According to the "A brief history of the debt" section, it states that in 2007, the debt was 9008 Billion (9 trillion), which was 36.8% of the GDP. Yet according to List of countries by GDP (nominal) the US's GDP is 13.79 Trillion. Now, using some simple Math, I can say with certain assurance, that 9 trillion is more then 36.9% of 13 trillion. Or is there something that I am missing here?--Passerby25 (talk) 22:27, 4 March 2008 (UTC)

the source provided is CIA factbook, maybe someone is messing with it >:) factbook is not a good source as they never claim it is verified data anyway. ok proper answer, because public debt refers to only the debt that is held in public US dollars. which is around 5 trillions. the total debt the government own is 9 trillion dollars. i include the following link for anyone interested in both figures:
http://www.optimist123.com/optimist/2006/04/the_best_debt_c.html
- Akinkhoo (talk) 15:05, 6 March 2008 (UTC)