Who Causes The National Debt?

Borrowing is what causes the National debt. Credit is extended to the government just like a credit card, based totally on the fact that the government raises revenue from taxpayers. There are two parts to the National debt: Public Debt (taxpayers responsibility) and Intergovernmental holdings (federal debt, government departments are supposedly responsible).

When the government’s revenue is not sufficient to cover spending it must borrow money, this increases the National debt. A combination of factors have caused recent record deficits: the economic downturn following 9/11, the war on terrorism, the Iraq war, and huge tax cuts in 2001 and 2003 that dramatically reduced revenue. States, corporations, and some foreign governments in the name of the United States Federal Government causes the national debt when money is borrowed with government collateral in the form of Treasury Bills, notes, and Bonds.

The Civil War caused a great increase in the national debt, growing from 65 million in 1860 to 1 billion in 1863. The debt then grew to 22 billion by 1920 as the US paid for World War 1. Social programs of Roosevelt and Truman also caused a great increase in the National debt in the 1930s and 1940s. By 1950, the US National debt was more than 260 billion. Reagan and Bush caused the National debt to quadruple from 1980 to 1992.

Recently George W Bush doubled the debt from 5 trillion to 9 trillion, and is expected to double during the current Obama presidency. The only way to pay down this debt is to pay off maturing securities and not replace them with new ones.