National Debt. What do we owe? April 2015 National Debt has reached $18.2 trillion Average of: $56,728 per person Average of: $154,161 per tax payer.

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Presentation transcript:

National Debt

What do we owe? April 2015 National Debt has reached $18.2 trillion Average of: $56,728 per person Average of: $154,161 per tax payer

What is the National Debt? Definition: money owed to creditors in the US & in foreign countries 33% of the debt is owned by foreign investors – How do they own debt? By purchasing bonds Country that owns the most: China – currently have around $1 trillion; if released into circulation, the value of the dollar would decrease Value of the dollar is determined by supply & demand

How do we accumulate debt? The Federal Budget: all of the money spent on federal programs in one year Based on a Fiscal Year instead of a calendar year starting October 1 & ending September 30 Top 3 Categories of expenditures: 1.Medicare/Medicaid 2.Social Security 3.National Defense

How do we accumulate debt? Deficit Spending: government spends more than it takes in taxes in one year – *Not the same as National Debt; debt + several deficits To make up the difference, the gov’t must borrow the money by selling securities (bonds) A budget surplus occurs when the gov’t spends less than its tax revenues Two ways gov’t brings in monies: Tax & Borrow

How do we accumulate debt? Where do revenues come from? Income Tax – 16 th Amendment 1.Progressive Tax: higher incomes pay a higher tax percentage 2.Regressive Tax: lower incomes pay a higher percentage of tax of their incomes 3.Flat Tax: Tax levied on everyone equally Only recent president to have a surplus: Bill Clinton

Why we shouldn’t pay down the debt? 1.Could lead to a recession; cuts to our federal programs in order to do so 2.Should work on building up our Gross Domestic Product so the debt is just a smaller percentage 3.What is the GDP? – Total dollar value of all goods and services produced in a nation in 1 year

Why we should pay off the debt? 1.Increase the value of the dollar 2.Lower the cost of interest we pay in the future 3.Restore confidence in the economy