Before looking into what this entails for the future of America some definitions are in order.
National Debt is money borrowed by the federal government.
Gross National (Domestic) Product (GNP or GDP) equals the current market value in U.S. dollars of all goods and services produced in the United States of America.
Debt Burden is a ratio of Public Debt to GNP.
The Government Accountability Office (GAO) is the investigating branch of the United States Congress (a.k.a. - The Congressional Watch Dog)
Statistically speaking (in other words - cold hard numerical facts), the lowest Debt Burden in modern history (post WWII) in the United States occurred during the Richard M. Nixon presidency with the lowest ever recorded in 1973. The first recorded National Debt was registered in 1791. The debt resulted from the internal costs of the American Revolutionary War. The nation has seen a steady climb in its national debt since that time and can be traced directly to war debt (the cost of wars waged, arms build up during cold war periods and nation building) and entitlement spending of government programs such as welfare, food stamps, social security, medicare, and a host of others.
During the Franklin D. Roosevelt/Harry S. Truman years (1933-1950) the largest one-time increase in gross public debt was recorded at 20%. That was a 16-fold increase as compared to all previous administrations dating back to the founding of the nation. While World War II accounted for some of that increase, most of the debt, had reached nearly 40% of GDP - the largest recorded up to that time. It can be directly attributed to the costs of FDR's public works programs, the newly instituted Social Security endowment and other smaller entitlement spending programs. What seemed a good idea at the time in retrospect has shown that instead of staving off the initial effects of The Great Depression, FDR's increased spending extended it for nearly a decade due to the burden these costs placed on the overall GDP. Even though, until this Century, the United States hadn't seen those kinds of debt numbers since the end of World War II, the Debt Burden has remained in the mid to upper 20 and 30 percentile - that is, until recently.
Under the Bill Clinton Administration the debt began falling as a result of three factors - The President and then Speaker of the House Newt Gingrich were able to reach important spending compromises that led to two balanced budget amendments, a Welfare Reform Act that curtailed runaway food stamp and welfare spending, and the end of the cold war which brought about a significant reduction in military appropriations. By the end of President Clinton's 8-year term he was able to hand the newly elected President George W. Bush a balanced budget, a fiscal surplus and a Debt Burden of just less than 33%, which was a 10% decrease over the burden he had inherited from President George Herbert Walker Bush 8 years earlier. Even though the economy at the end of his term was beginning to show signs of a return to decline the overall fiscal picture was healthy. President George W. Bush started his first term with every intention of concentrating on the continuing drop of the Debt Burden on the American taxpayer, corporations and small business owners. When he entered office the debt owed by the United States was approximately $5 to $6 trillion. The stated goal of his administration was to cut this down about 2% or more by the end of his first term. However, everything changed after September 11, 2001 (9/11). The focus radically shifted from domestic enterprises like getting America's economic house in order to defending its airspace, waterways and borders, fighting terrorism across the globe which ultimately ended up in a costly Middle East war which is now over a decade old, and sadly, a progressive march into full scale nation building, one of the most costly and fiscally foolhardy endeavors any nation can undertake. By the end of President Bush's second term the United States debt was nearly $11 trillion. That was a shocking increase of 40% in government spending in 8-years, which put the country on the brink of national bankruptcy and a second Great Depression.
The government's answer to this horrendous turn of events was to print more money, accumulate more debt by borrowing trillions from unfriendly nations like China, sell U.S. interests to these same nations as collateral on the debt and then increase the nation's dependency by providing borrowed funds for two separate stimulus spending programs (neither of which worked successfully) that the nation could ill afford.
The first 3-years of President Barack Obama's Administration saw the largest rise in the Debt Burden in American history going all the way back to the first deficit in 1791. From January 2008 to May 2012 (just 3 short years), President Obama and a lackluster Congress (first led by Democrats - then Republicans), the national debt has risen from $11 trillion to a staggering $16 trillion. That is a phenomenal, unheard of increase of 63% in the public Debt Burden. This was never seen before in American history and is unprecedented. This President and the Congress give no indication that they intend to curtail their runaway and irresponsible spending frenzy.
At the current rate of spending it has been forecast by the GAO*, IF not halted this nation will be insolvent by the year 2030.
Now it's time for another one of those definitions. To be an Insolvent country means a nation is unable to pay their debt or meet it's obligations to its citizens. It cannot even pay down the interest on that debt.
We have already seen the first result of this road to insolvency. A few months ago the S&P (Standards & Poor Index) dropped the United States' long-term rating from its prestiges AAA to the lower AA+, while its short-term rate was downgraded even lower to an A-1+. This short-term rate is third-world territory on the international economic front. If this current administration and Congress doesn't get their fiscal act together America can look forward to further drops in those ratings numbers.
Why is this important to the average American trying to make a living and raise a family? It's relevant because the more the U.S. trends toward insolvency the less likely lender nations, nations importing our goods and services, and nations dependent on America for its exports will be willing to do business with the United States. They will be hesitant to invest in American products, businesses and negotiate trade transactions. To understand it better ask this question to yourself: Would you be willing to give money to someone you know can never pay you back, much less not even be able to pay on the interest of the loan? Would you by a product from a company that manages its books as badly as the United States government has balanced their ledger? Of course not. That would be pure foolishness on your part. It was that same kind of stupidity that allowed the government to give banks the go ahead to lend large sums of money to homebuyers that the lending institutions knew full well the borrower couldn't afford the monthly mortgage premiums. This kind of lunacy led to the greatest housing crisis in U.S. history.
America's biggest lenders and investors are China, Japan and Saudi Arabia. While The United States still holds the lead as the biggest purchaser of world goods, that is changing because of the incredible debt it is now experiencing. While America still reigns as the import king, its exports have fallen off drastically within the last decade.
Each of these three nations, China-Japan-Saudi Arabia, are also beginning to experience their own fiscal hard times and recessionary period. Out of sheer self protection it won't be long before they will be forced to call in their loans to the United States. Currently China holds about $5 trillion of U.S. debt, which is held mostly in U.S. Treasury Securities.** Japan is second at a little over $1 trillion.*** And Saudi Arabia is third with debt mainly held in U.S. agricultural industries throughout the Mid-West and Western part of the United States. The rest of the debt is spread out mostly amongst smaller European investors which is one reason why what is happening today in the European Union nations is so important to the U.S. economy. The lion's share of the debt is still held by the federal government's central bank, which is to say, both public and private investors are holding the debt in the nation's Central Banking System.
Insolvency is what lies at the end of the current path this nation and its elected officials are taking its citizens down. However, it doesn't have to be so. There is still time, but that road is quickly reaching a fork, one leads to a climatic conclusion of decay, ruin and bankruptcy leaving America just another footnote in history, while the other can lead to fiscal responsibility and a brighter future.
The American voter must act now. Become responsible citizens. The days of voter apathy and complacency has to be over. America can no longer afford disenfranchised citizens. Get registered to vote, get to know your candidates thoroughly. With the internet so readily available at our fingertips ignorance of the issues, candidates and programs is no longer a viable option. In the past we have gotten the kind of government a 30% voter turnout gives us and it has failed us -- failed us terribly and it is bringing this nation to ruin.
The year 2030 is only 18-years away - almost everyone reading this will still be alive to see that year arrive. This may be our only chance to turn it around for ourselves, our children and our grandchildren.
Be a responsible American because only We the People can fix this. Not our government -- US!