Bill Rapp here with the Heartfelt and Hot in Houston Blog, and this is our newest segment: What $27 Trillion In Debt Looks Like!
Visual Capitalist has released another analysis filled with their usual nifty visuals that puts the sheer quantity of the government’s rapidly increasing debt into perspective. What $27 Trillion In Debt Looks Like!
The rapidly climbing chart actually looks better than it is because, as you can see, 2020 is broken out into quarters and doesn’t even go all the way until the end of the year. Indeed, the chart appears to be exponential, which is not a good thing when it comes to debt. After all, what can’t go on forever, doesn’t.
At least regarding the deficit, however, things are projected to improve and get back to a more “normal” deficit. Unfortunately, it is still not projected to get anywhere near a balanced budget anytime soon. Indeed, over the past 35 years, we only had a positive surplus for a very short while in the late ’90s.
The debt, on the other hand, has grown enormously both in real terms and as a percentage of GDP. And Visual Capitalist notes:
“U.S. debt was relatively moderate between 1994 to 2007, averaging 60% of GDP over the timeframe. This took a drastic turn during the Global Financial Crisis, with debt climbing to 95% of GDP by 2012.
“Since then, America’s debt has only increased in relative size. In April 2020, with the COVID-19 pandemic in full force, it reached a record 122% of GDP. This may sound troubling at first, but there are a few caveats.”
The government debt has effectively doubled over the past 15 years.
And of course, as every borrower knows all too well, this amount of debt comes with very large interest payments that continue year in and year out as the debt grows larger. “For FY2019, this was approximately $327 billion,” per Visual Capitalist.
Components of the federal debt
The piece by Visual Capitalist also notes where all of this spending goes. A full 62.2% of spending, or $2.735 trillion, goes to mandatory spending, including things like health programs ($1.1 billion), social security ($1 billion), and income security ($301 billion).
30.4%, or $1.338 billion, goes to discretionary spending, which includes things like transportation ($100 billion) and education ($72 billion). But by far the most goes to the military, at $677 billion (which accounts for 37% of the entire world’s military spending). And again, there’s that pesky $327 billion that goes toward debt service.
I should note that this doesn’t include state and municipal government spending, which is where most of the spending for things like education comes from. What $27 Trillion In Debt Looks Like!
The inspiration for today’s edition came from this original article: https://www.biggerpockets.com/blog/charting-americas-debt?utm_source=Iterable&utm_medium=email&utm_campaign=Newsletter%20%7C%2004/13/21%20%5BRegular%20%2B%20Plus%5D
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