Growth of What We Owe

June 6, 1960

Our national debt is $289 billion. If there were any serious thought of ever paying this off, even in dollars of today’s buying power, it would present an appalling problem. If we could pay off an average of $2 billion every year, without interruption, and never incur another cent of debt, it would still take nearly a century and a half to wipe the slate clean.

Precisely because there is always danger of another war, it is merely common prudence and common sense to reduce the debt in time of peace or even cold war so that our national credit will be strong enough to meet the incalculable borrowing demands of a shooting war. Yet instead of reducing the debt in the fifteen years since the end of World War II, we have increased it, through deficits, by an average of $2 billion a year, so that it now stands $30 billion higher. And whenever the President talks of balancing the budget, not to speak of reducing the debt, he is accused of putting dollars and mere bookkeeping ahead of national needs.

HEAVY EVEN FOR US

Why is the debt problem treated so lightly? Probably the most frequent argument is that we are the richest country in the world, and can afford it. But the debt of the United States is one of the heaviest in the world even in proportion to our total wealth and resources.

I append below a table comparing the public debt of fifteen leading countries with the latest available figure of their annual tax revenues. The figures for the U.S. are for the current fiscal year. The figures for other countries are from the Statistical Yearbook of the United Nations for 1959. A few are for the 1959 fiscal year, and others earlier. The comparisons are in billions of the respective currencies of each country, except for France, Italy, and Finland, where they are in trillions. The figures in terms of currencies are therefore not comparable as between countries. What is significant and comparable is the percentage of each country’s debt to its own annual income from taxes. This I have calculated in the final column.

It will be seen that the U.S. public debt is not only by far the greatest in absolute terms but one of the heaviest even in relation to revenues.

It should not be assumed that the countries with the heaviest relative national debts are more blameworthy than others. The debts of the three great English-speaking countries are relatively highest not only because they were engaged in a great world war but because they have not reduced their relative debts to the same extent as some others by the swindling device of monetary inflation. But the comparisons do mean that their debt problem is still greater relatively than that of most other countries.

In fact, the relative debt burden of the United States is much greater than these comparisons imply. A year ago Secretary of the Treasury Anderson placed before the Senate Finance Committee a list of the long range commitments and contingent obligations of the Federal government in addition to the direct public debt. This total of contingent obligations alone came to $316 billion, or more than the direct debt itself. As The Morgan Guaranty Survey for May has pointed out, these contingent obligations are “a massive commitment of the public credit.” And in addition even to these $316 billion contingent obligations, our social-security program already involves a future actuarial liability running into hundreds of billions.

DEBT VS. REVENUES

To add lightly to this liability now, by hastily passing a “medical care” bill for the aged, would be an act of reckless folly.