Facing our national debt
The current debt ceiling/defunding debacle is like a hurricane. The true damage is not the front side, but the wicked winds of the backside. The shutdown brings disorder but the possibility of an Oct. 17 default on loans and investments will cause damage on a global scale.
The deficit between taxes collected and government spending was first calculated by Alexander Hamilton in 1790. Annual shortfalls have accumulated every year since, except debt-free 1835, into our national debt. It has a history of raised ceilings passed by both parties.
Almost blinding with its zeroes the current national debt is $16,700,000,000,000. Beyond those zeroes, a more accurate picture of our economy is debt viewed as a percentage of the value of our goods and services. The relationship between Gross Domestic Product and debt is the significant number, not the one with all the zeroes.
The U.S. debt reached over $2 billion during the Civil War. But by World War I the economic growth and rising GDP in the industrial age brought a $900 million Debt-to-GDP of 2.7 percent, the lowest percentage in history. The highest was reached by the end of WW II and was 113 percent.
Recession slowed our economy during the Reagan administration. Permanent tax cuts, defense spending and the largest peacetime deficits to date caused the Debt-to-GDP to rise. Tax increases in 1990 during the Bush and Clinton administrations along with prosperous GDP growth reversed the trend.
The recession of 2007, stagnant GDP growth, war and peacetime spending by both Bush and Obama administrations have yielded the highest Debt-to-GDP since WWII. This staggering 73 percent became the lightning strike in a stand-off about the health-care law.
This pales in the face of the possibility of default. That $16,700,000,000,000 is funded by investments tied to the global economy. A 2000 government report called "Life after Debt" was written when the U.S. had a budget surplus. It projected the national debt paid off by 2012 revealing far-reaching damage. The end of U.S. debt would mean the end of Treasury bonds.
Much of the world still invests in the full faith and credit of the U.S. through Treasury bonds. The bond market is a critical link in the global economy. Not raising the debt ceiling in an attempt to undermine a law brings dire consequences. There is nothing heroic in refusing to compromise and harming others. Americans have survived shutdown before, defaulting is the storm surge.