Little Bits of History

Zero Debt

Posted in History by patriciahysell on January 8, 2012

A balanced budget

January 8, 1835: For the one and only time, the US national debt is zero. The country started out with $75,463,476.52 of debt as of January 1, 1791. The debt climbed slowly and peaked at $127.3 million in 1816. By 1818, the debt was diminishing and on January 1, 1835 was a mere $33,733.05. Andrew Jackson was President at the time of the final payment which came on this date. By January 1, 1836, the US was again in debt for $37,513.05. By 1838, the national debt was again in the millions.

With the Civil War, the debt reached $1.1 billion in 1863. By 1865 the debt was $2.7 billion. World War I saw the debt climb into the tens of billions ($14.6 billion in 1918). In the next world war, debt reached the hundreds of billions ($136.7 billion in 1943). In 1982, the US hit the trillion dollar mark with $1.1 trillion of national debt. And with 2008 the US got to the ten trillion mark. The debt represents over 72% of the Gross Domestic Product (GDP).

Japan’s national debt is 194% of its GDP, but they have a higher savings rate, making it easier to finance the debt. The lower savings rate in the US means 25% of the debt is held by foreigners while in Japan only 10% is. Figures from 2007 show the US debt to be 60.8% of the GDP. Canada’s debt was 64.2% of the GDP while the UK was 43.6% in the same year. Worldwide debt is assumed to be about $100 trillion.

The US yearly budget is proposed by the President and set by Congress. There are many line items in the budget. The line item for the 2008 budget for the Treasury Department (including interest on Debt) was $550 billion. Two other line items were higher: Health and Human Services with $700 billion budgeted and the Department of Defense with $650 billion. Social Security is a different funding source and was budgeted for $650 billion in 2008. The fiscal year ends on September 30. There are slightly more than 305 million Americans. With the 2008 debt at $10.6 trillion it means that every man, woman, and child owns about $35,000 of that debt.

A national debt, if it is not excessive, will be to us a national blessing. – Alexander Hamilton

The national budget must be balanced. The public debt must be reduced; the arrogance of the authorities must be moderated and controlled. Payments to foreign governments must be reduced, if the nation doesn’t want to go bankrupt. People must again learn to work, instead of living on public assistance. – Cicero

Small debts are like small shot; they are rattling on every side, and can scarcely be escaped without a wound; great debts are like cannon; of loud noise, but little danger. – Samuel Johnson

Blessed are the young, for they shall inherit the national debt. – Herbert Hoover

Also on this day:

Genius Personified – In 1942, Stephen Hawking was born.
War on Poverty – In 1964, President Johnson declared war on poverty.
Teeny Tiny – In 1297, the Principality of Monaco gained its independence.

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