A Beaumont, Texas, talk radio host caught my attention Friday when he threw out some interesting facts about this country’s $17.2 trillion national debt. The day after Congress reopened the government and suspended the debt limit, the increase totaled $328 billion, the largest oneday increase on record.
The numbers are so unimaginable we tend to turn our thoughts to issues over which we have some control. However, there are 1,800 federal employees in Parkersburg, W.Va., who do manage our debt. They operate out of the Bureau of the Public Debt. I suppose you could call them our nation’s bankers.
The bureau’s job is to borrow money the country needs to operate the federal government and to keep track of the debt. It also makes $415 billion a year in interest payments.
I was curious about where that talk radio guy was getting his information since he occasionally likes to comment on the declining influence of newspapers. And just as I suspected, he got the national debt tidbits from a story in USA Today. Talk show hosts, some bloggers and others who love to deride newspapers would have a difficult time surviving without content from newspapers, but that’s another story for another day.
So, let’s get back to the national debt. To whom do we owe the money? Much of it we owe to ourselves, but also tidy sums to Social Security and foreign investors. We owe China, our biggest creditor, $1.3 trillion. Japan comes in No. 2 at $1.1 trillion, according to figures compiled by the Washington Post. We owe 15 other countries debts ranging from $28.7 billion to the $256.4 billion owed to Brazil.
The national debt when Bill Clinton left office was $5.6 trillion. It climbed to $10.6 trillion during the two terms of George W. Bush, and President Obama made that increase a major campaign theme that helped propel him into the White House. You don’t hear much from the president these days now that the national debt has grown to over $17 trillion.
The Post said the more telling statistic is when debt is expressed as a percentage of the overall U.S. economy (the gross domestic product or GDP).
Before Ronald Reagan took office in 1980, the debt was 33 percent of the GDP. It went down only once (during Clinton’s two terms). President Obama has achieved his own unique record. The debt during his five years has climbed from 77 percent to 105 percent of GDP, and he has three more years to go.
One of the more interesting parts of that USA Today story had to do with the debt this country owes to the Social Security Trust Fund. Parkersburg is also home for that fund.
As we have heard so often, the trust fund exists only on paper. The newspaper said the balance is kept electronically, but a 1994 law requires that the Treasury maintain a “paper instrument” as evidence the government is borrowing from Social Security.
In order to fulfill that requirement, about $2.7 trillion in Social Security IOUs is contained in a single threering binder. It is kept in a locked vault, which is an oversized filing cabinet with a combination lock.
The government has also borrowed more than $5 trillion from various pension funds and trust funds to pay for ongoing expenses.
ABC News reported a rare event back in April. It said for the first time since 2007 the U.S. Treasury was planning to make a $35 billion down payment on the federal debt. It happened because the budget deficit had been shrinking more than expected.
You can’t read that USA Today story and not wonder how in the world the Bureau of the Public Debt ended up in Parkersburg, W.Va., a town of 31,492 citizens. The bureau is the city’s largest employer.
President Eisenhower in 1954 wanted to relocate vital government functions away from Washington, D.C., in the event of a nuclear attack. Parkersburg is 300 miles away, about halfway between Washington and Chicago, where most of the bond processing was done.
The late U.S. Sen. Robert Byrd, D-W.Va., was elected in 1959 and eventually became chairman of the Senate Appropriations Committee. In 1975, he had the Chicago office moved to Parkersburg. Byrd also moved almost everything else in Washington that wasn’t nailed down to his home state.
That’s the way things work most of the time in the nation’s capital. Powerful members of Congress keep unnecessary government facilities and contracts operating in their home states. All of that only increases the nation’s liabilities.
Congress will have to deal with the nation’s debt one of these days because the Social Security, Medicare, pension and other bills will be coming due. Either the debt will keep increasing, which is risky, programs will have to be cut or new taxes will have to be passed.
None of those are desirable alternatives. But it’s like that famous 1972 Fram oil filter commercial said, “You can pay me now or pay me later.”