MINNEAPOLIS (WCCO) — None of us is a fan of credit cards — we use them, we abuse them — but today’s federal government can’t run without one. The U.S. National Debt is at $14.3 trillion and climbing, according to the U.S. Debt Clock. That’s $130,000 per taxpayer.
But if the national debt is the nation’s credit card, what kind of things are we charging?
“Well, we charge for everything,” said Jay Kiedrowski, a senior fellow at the Humphrey School of Public Affairs.
He said the United States doesn’t use credit like most consumers do, making specific purchases. Instead, the government borrows money as a systemic part of the budget.
According to Kiedrowski, out of every dollar in federal spending, the government takes in 57 cents in revenue, largely from taxes.
“So we’re borrowing for the other 43 cents. That in a sense is applied against all of the federal budget,” he said.
The biggest parts of the federal budget, therefore, are responsible for the biggest part of the federal debt. Medicare/Medicaid, Social Security, Defense and Wars make up 60 percent of the federal budget. You could say they make up about $8.6 trillion of the debt (60 percent).
“What we’re doing is financing two wars, we financed the stimulus package, at the same time we have a high rate of inflation on health care,” said Kiedrowski.
In 2000, we had a budget surplus, and the government projected that we’d pay off the $6 trillion we had in outstanding debt by now.
But the Obama White House blames the bad economy combined with policy decisions on accelerating the debt.
They say lower revenue from the bad economy added $3.6 trillion to the debt. The Bush tax cuts are assigned $1.8 trillion.
“A tax cut reduces your revenue, which requires you to borrow more,” said Kiedrowski.
Wars in Iraq and Afghanistan: $1.5 trillion. President Obama’s stimulus spending and tax cuts added another $1.1 trillion.
“In order to get the 43 percent of the budget that’s borrowing under control, you’re going to have to go after everything,” said Kiedrowski.