America’s debt now tops $16 trillion, and the meter never stops running. The national debt increases by about $35 million an hour, and around $2 billion every 24 hours.
As the country’s debt skyrockets, politicians and pundits are debating how to get it under control. If nothing is done, we could be $17 trillion in the hole later this year.
But for the first time in six years, the federal government said it would make a small down payment on the national debt – about $35 billion worth. They say higher tax receipts and recent spending cuts helped raise the money.
Which brings us to the topic of this Just Explain It.
What exactly is the debt? And how long would it take to pay it off?
First, here’s some history.
Before President Reagan took office, the national debt was $1 trillion. By the time President Clinton left the White House, it reached $5.6 trillion. Eight years later, the debt had almost doubled. And today it stands at $16.8 trillion.
So… where did all of this debt come from?
It is the amount of money the U-S government has borrowed to pay its bills. It exists because the government’s expenses exceed its revenues. So to pay the bills, the government borrows money from countries like Japan, China, Brazil and other places.
But surprisingly enough, we owe most of the money to ourselves. 66% of the national debt is owned by U-S entities like, the Federal Reserve, Social Security, various pension plans, banks and individual investors.
To understand just how much $16 trillion is…here are some fun facts.
Actor Tom Cruise reportedly made $75 million last year. Now most of us would agree that’s a lot of money. But for him to earn just $1 trillion, he would have to make $75 million a year for 14,000 years.
For those of you who like to shop…you’d have to spend $5 million a day for the next 546 years.
And if you laid a trillion one-dollar bills end-to-end, they would wrap around the equator over 380 times and you’d still have 17 laps to go.
Our $16 trillion debt could be paid off in a year. But in order for that to happen, the government would have to stop spending completely and raise taxes at least 10% across the board. The money generated would go directly to paying down the debt.
Could it work? Let us know what you think. Do you have a topic you’d like explained? Give us your feedback in the comments below or on Twitter using #JustExplainIt.