OPINION: Nation debt increasing at an alarming rate
Fmr. Sen. George Nodland, R-Dickinson, shares his take on nation debt increasing at an alarming rate
The national debt has been in the news recently since both the Trump administration and the Biden administration have passed and are administrating Coronavirus relief bills spending over $3.9 trillion. This addition to the existing debt, when spent, will bring the total national debt to around $30 trillion, which is hard for an average American citizen to comprehend and wrap their arms around!
One way to look at the debt is comparing it to the Gross domestic product (GDP) of the country. GDP is the value of everything produced in a country-all the goods and services provided in one year. It is estimated that the GDP for the United States this year will be around $28 trillion. Thus, it would take all of our country's production (GDP) in one year to pay off our debt without the interest on the debt. Some comparisons to the past show in 1929 the debt was $17 billion (16% of GDP), 1946 after WWII, it was $269 billion (118% of GDP) and in 1975 the debt was $533 billion (32% of GDP).
It is also interesting to look at whom does the federal government owe the debt to and how the debt is administered. The debt is administered in government treasury bonds and notes in two-five-seven-and ten year durations, and savings bonds and securities. Most of the debt (70%) is held by US citizens in pension funds, and various US businesses. The balance of the debt (29.3%) is held by 9 foreign countries with Japan the most ($1.266 trillion) and China the next highest at ($1.24 trillion).
The interest rate on the debt varies with the length of the treasury notes and the demand for money and goods. The interest rate is relatively low today, but projections indicate it may increase due to the excellent economy projections which causes inflation. The interest on the debt in 2008 was 8.5% of the federal budget- it is projected to be around $378 billion (7.8%) of the federal budget this year and over $665 billion (10%) of the federal budget by 2030.
One interesting fact is that North Dakota has an estimated GDP of $55 billion and a total debt of around $2.885 billion which is 5% of GDP. North Dakota, South Dakota, and Vermont have the lowest amount of debt in the country. Another very positive point for North Dakota is we have a savings account (Legacy Fund)) of over $8 billion to handle the $2.885 billion debt if the economy totally collapses in the future.( We can thank the oil industry for this savings account!)
I am concerned about the future debt of our country! A collapse in our economy or over spending could cause our country to be on the road of bankruptcy. Higher inflation will force us to spend such a larger part of our budget on interest that the necessary government programs and services such as social security, Medicare, infrastructure, and military programs will not be funded as needed! The World Bank says” a country reaches the tipping point when debt-to-GDP ratio exceeds 77%”. Do we want to become like countries in the past where people had to take a bushel basket full of money to buy a loaf of bread? It is time our leaders face the music and start balancing our yearly budget and start reducing our government debt! We should not pass the debt to our grand- children and great-grandchildren!