With the 2012 presidential election just around the corner, the national debt has, once again, taken center stage. National debt is incurred when the government’s spending (Social Security, Medicare, defense, etc.) is larger than its revenue (personal and corporate taxes, investments, etc.), forcing the government to borrow money. The national debt is comprised of debt held by the public and intergovernmental debt. Debt held by the public is used to fund the day-to-day operations of the government and is incurred in the form of securities sold to the public (individuals, corporations, local governments, foreign countries, etc. Intergovernmental debt is made up of trust fund accounts used to fund specific government programs, like the Social Security Trust Fund, where cumulative surpluses, including interest earnings, of these programs are invested in Treasury securities. The US’s national debt is currently $16 trillion.
At the end of the Clinton presidency in 2001, the Congressional Budget Office projected that the country was on track to pay off its debt and accumulate $2.3 trillion in savings by 2011. Instead, the intervening decade saw an 11.7 increase in the national debt stemming from factors such as the Bush Tax Cuts ($3 trillion), the Wars in Iraq and Afghanistan ($1.4 trillion), The Recovery Act ($800 billion) and the recession ($3.5 trillion).
The US is obligated to make minimal payments on its debt each year. Failure to do so would make investing in US Treasury Securities too risky for most investors, thereby drying up the flow of borrowed money that the government relies on to fund its operations, forcing it to freeze funding for some or all of its programs. Legislation is in place that caps the amount of money that can be spent each year on debt payments. Increasing that limit can only be enacted by an act of Congress. In 2011, it was projected that the amount of the government’s minimal debt obligation would exceeded the established debt limit by early August, sparking contentious debate in Congress on the national debt. Republican members of the House refused to increase the limit without securing a plan to drastically decrease government spending. Months of negotiations resulted in the Budget Control Act, which increased the limit by $400 billion, reduced spending by more than $400 billion and established the Joint Select Committee on Deficit Reduction, tasked with reducing spending by at least 1.5 trillion over the next ten years. Failure of the Committee to recommend the required reductions, and Congress enact legislation based on the recommendations, would trigger across the board cuts of up to 1.2 trillion. In November 2011, the Committee announced that they were unable to come to an agreement on reductions. The across the board cuts are scheduled to start next year.
Understandably, the national debt is a hot button issue in the presidential campaign, with both parties blaming the other for the drastic increase of the last decade. The Republicans claim that Obama has added 6.5 trillion in debt in his first term. Democrats defend Obama’s record by pointing out that he inherited many of the circumstances that led to that increase from the Bush Administratio. Sorting out the truth of both side’s claims can be difficult. Luckily, websites like FactCheck.org and PolitiFact.org can help you tell fact from fiction.
Both candidates include debt reduction in their platforms. Mitt Romney’s plan focuses on cutting government spending while extending the Bush tax cuts and further reducing taxes for both individuals and corporations. Barack Obama’s plan focuses on a combination of reducing spending and increasing taxes on those making over $250,000 a year. In addition to the Obama and Romney campaign sites, there are several online resources that can help you understand the candidates’ positions on the national debt and other important campaign issues. Project Vote Smart provides biographies, issue positions, voting records and campaign finance information on candidates on federal and state races. On the Issues provides information on key issues, candidate policy statements, voting record information and key quotes on campaign issues.
In addition, the Libraries have many resources on the national debt issue which can be found by searching Minerva, our online catalog:
White House Burning: The Founding Fathers, Our National Debt, and Why it Matters to You by Simon Johnson and James Kwak. New York: Pantheon Books, c2012. Dewey Library / HJ 8101 J64 2012.
Lost Decades: The Making of America’s Debt Crisis and the Long Recovery by Menzie D. Chinn and Jeffry A. Frieden. New York: W.W. Norton & Co., c2011. Dewey Library / HJ 7537 C45 2011.
Inflated: How Money and Debt Built the American Dream by R. Christopher Whalen. Hoboken, NJ: Wiley, c2011. Dewey Library / HJ 8101 W43 2011.
Forgive Us Our Debts: The Intergenerational Dangers of Fiscal Irresponsibility by Andrew L. Yarrow. New Haven, CT: Yale University Press, c2008. Dewey Library / HJ 8119 Y37 2008.
The National Debt: From FDR (1941) to Clinton (1996) by Robert E. Kelly. Jefferson, NC: McFarland, c2000. Dewey Library / HJ 8119 K45 2000.
The Politics of Taxing and Spending by Patrick Fisher. Boulder: Lynne Rienner Publishers, 2009. Dewey Library / HJ 2381 F57 2009.
Taxes, Spending, and the U.S. Government’s March toward Bankruptcy by Daniel N. Shaviro. Cambridge, UK: Cambridge University Press, c2007. Dewey Library / HJ 257.2 S53 2007.
Passing the Buck: Congress, the Budget, and Deficits by Jasmine Farrier. Lexington: University Press of Kentucky, c2004. University Library / JK 1021 F37 2004.
Our Government Documents collection is also chock full of reports, transcripts and proposals published by the Federal government regarding the national debt and the national debt limit:
What is the Real Debt Limit?: Hearing Before the Joint Economic Committee, Congress of the United States, One Hundred Twelfth Congress, First Session, September 20, 2011. Washington: U.S. Government Printing Office, 2012. Online / GovDoc: J 85 Y 4.EC 7:S.HRG.112-191.
Debt Limit: Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury Market: Report to the Congress. Washington: U.S. Government Printing Office, 2011. Online / GovDoc: J 85 GA 1.13:GAO-11-203.
Perspectives on the Economic Implications of the Federal Budget Deficit: Hearing Before the Subcommittee on Economic Policy of the Committee on Banking, Housing, and Urban Affairs, United States Senate, One Hundred Twelfth Congress, First Session, October 5, 2011. Washington: U.S. Government Printing Office, 2012. Online / GovDoc: J 85 Y 4.B 22/3:S.HRG.112-387.
The Broken Budget Process: Legislative Proposals: Hearing before the Committee on the Budget, House of Representatives, One Hundred Twelfth Congress, Second Session, May 31, 2012. Washington: U.S. Government Printing Office, 2012. Online / GovDoc: J 85 Y 4.B 85/3:112-26.
The Broken Budget Process: Perspectives from Budget Experts: Hearing before the Committee on the Budget, House of Representatives, One Hundred Twelfth Congress, First Session, September 22, 2011. Washington: U.S. Government Printing Office, 2011. Online / GovDoc: J 85 Y 4.B 85/3:112-16.
For assistance on researching the national debt and other campaign issues, contact bibliographer Richard Irving (442-3698, email@example.com) or stop by the reference desk.