National Debt Tops $14 Trillion

By Mark Knoller
Topics Economy ,: White House

The latest posting today of the National Debt shows it has topped $14 trillion for the first time.

The U.S. Treasury website today reported that as of last Friday, the last day of 2010, the National Debt stood at $14,025,215,218,708.52.

It took just 7 months for the National Debt to increase from $13 trillion on June 1, 2010 to $14 trillion on Dec. 31. It also means the debt is fast approaching the statutory ceiling $14.294 trillion set by Congress and signed into law by President Obama last February.

The federal government would have to stop borrowing and might even default on its obligations if Congress fails to increase the Debt Ceiling before the limit is reached.

Some Republicans in the new Congress have said they'll seek to block an increase in the Debt Ceiling unless a plan is in place to significantly reduce federal spending and unfunded government liabilities on entitlement programs such as Social Security and Medicare.

White House economic adviser Austan Goolsbee warned yesterday that it would be "catastrophic" if the U.S. Government were to default on its financial obligations.

"That would be the first default in history caused purely by insanity," said Goolsbee of plans to block an increase in the Debt Ceiling.

Breakdown of Government Spending, as Percent of GDP

This chart shows how government spending in fiscal year 2010 was split between Social Security, Medicare, Medicaid, defense and the rest of the federal budget.

Information from the Office of Management and Budge

Read more: http://www.cbsnews.com/2300-250_162-10008800-2.html#ixzz1TVz7ryxw

The History of Social Security

President Roosevelt signed the Social Security Act into law in 1935 in the midst of the Great Depression. The initial version of the law only benefited the primary worker of the family, but by the time the first benefits were paid out in 1940, the law had been amended to include survivor benefits and the benefits for the retiree's spouse and children. The law was amended again in 1956 to include disability benefits.

In 1981, a scare resulted from predictions that the Old-Age and Survivors Insurance Trust Fund, where Social Security benefits were paid from, would run out money in August 1983. Congress and the president created the bipartisan National commission on Social Security Reform to suggest a solution. In 1983, the commission issued a report that lead to the 1983 Social Security Amendments, which allowed the money to be taken off-budget and invested in U.S. Treasury bonds.

This year, the program will pay out $726 billion this year and is expected grow to $1.2 trillion a year by 2020. Current projections expect the Social Security to run out of money in 2035, without changes to the system

The History of Medicare

As the government has grown, spending on the social safety net for Americans has grown with it. Today, the number of people enrolled in Medicare grows at an average 2 percent a year. The program costs $574 billion a year and is expected to cost $1 trillion a year by 2020.

President Lyndon Baines Johnson established Medicare with the passage of the Social Security Act of 1965. Prior to passage, almost half of seniors lived without health insurance. Medicare Part A focused on hospital care, while Part B covered supplemental medical insurance for those over 65 years old. In 1972 Medicare expanded to include those who received Social Security benefits or disability payments for at least two years. Part C is the Medicare Advantage, which provides additional coverage and Part D is the prescription drug benefit added in 2003.

Government spending, percent of GDP

This chart shows the proportion of Gross Domestic Product taken up by the federal budget over the last 70 years. The first spike shows government spending during World War II.

Information from the Office of Management and Budget.

Raising the Debt Ceiling

The debt limit was put in place to prevent the Treasury from issuing new debt to cover short term bills. Congress implemented the first debt limit in 1917 as part of the Second Liberty Bond Act. The law delegated the approval of individual bonds to the Treasury, but still allowed Congress to have control over the country's finances. The limit applies to debt issued to the public and debt borrowed from the government?s accounts, such as Social Security, Medicare, Transportation and Civil Service Retirement funds.

The debt ceiling has been raised or extended 78 times since 1960, 49 times under Republican presidents and 29 times under Democratic presidents, including 3 times under President Obama and 7 times under President George W. Bush.

U.S. Debt, 1950-2010

This chart shows the amount of government debt over the last 60 years. It does not take inflation into account.

Information from the Office of Management and Budget.

ZA&dunia

Jumat, 29 Juli 2011