Our National Debt What is our current national debt? How did we get into this situation? What can be done to solve this problem?

2 $45,431 Burden That’s the current burden of every American citizen (including newborn babies) if we had to pay of our national debt TODAY!!! Consider this…

What types of debts does the US owe? The annual imbalances between revenues and spending in our government is known as a “deficit” Debt: The accumulation of deficits over time Public debt: U.S. government money held by individual Americans and foreigners Debt held by other financial entities: debt to finance a loan to a private entity in which government acquires a financial asset Inter-governmental debt: Held by government trust funds (e.g., Social Security) and other accounts

What is the history of our national debt? The US has developed a national debt since before we were a country – Pre-1776 Reasons: – War costs – Internal improvements – Social programs

Avoid occasions of expense... and avoid likewise the accumulation of debt…not throwing upon posterity the burden which we ourselves ought to bear.” George Washington

U.S. Budget Deficits/ Surpluses, Years, Deficits rose from 0 in 1969 to $340 billion in U.S. budget has $86 billion surplus in Deficits rose to $568 billion in 2004 and $1.8 trillion in 2009.

National Debt, National Debt (March 2009): $11 trillion

What are “unfunded liabilities”? Unfunded liabilities are benefits promised to be paid in the future without a viably source of income Social Security Medicare Total U.S. unfunded promises: $56 trillion Equal to the total net worth of the US

What are our projections for the future? Projections of future deficits and debt are based on assumptions, such as : –Economic growth or recessions –Changes in spending and tax policies –Population trends –Workforce participation rates History shows that assumptions and projections are often wrong

How does long term debt effect our everyday life? The burden of long-term debt will fall on America’s younger generations –Drastically higher taxes –Cut / loss of benefits –Lower living standards –Fewer choices for public spending –ALL OF THE ABOVE Conclusion: –Working longer –Paying more taxes –Fewer options

Like the idea of working old?

The Economic Crisis and Soaring Federal Deficits Deficits up from $455 billion in 2008 to $1.8 trillion in 2009 due to Federal spending associated with the current economic crisis

Where the Money Goes: President Obama’s FY 2010 Budget

What foreign countries own interest in our debt? 25% of our national debt is foreign owned – Japan – China – United Kingdom As of 2009, the US Treasury estimates that the US owes $757 billion to China ALONE !!!

Percent of Debt Held by the Public Owned by Foreigners

What are we going to need to do to get out of our current situation? –Which Federal programs and policies should be changed and how? Entitlement programs Unfunded spending Tax policy –How can budget processes and controls be reformed? –What should be the major goals of government, business and individuals in U.S. economy? Investing in the future (education, infrastructure, science, environment, etc.) Providing income security and good living standards Providing health care for all Americans