The national debt just skipped past $20 trillion, putting America’s indebtedness at a practically unfathomable number. Can you imagine 1 trillion of anything, let alone 20 trillion?
To get a grasp on how much 20 trillion truly is, take a look at the picture below, which shows how much space $1 trillion in stacks of $100 bills would take up. Now picture that picture 20 times in a row.
Here’s another helpful way to imagine $20 trillion. ReasonTV decided to make their own COSMOS parody to illustrate how large our debt is – and how overwhelming the task of paying it back will be. While Carl Sagan spoke of “billions and billions” of stars, they’re talking about trillions and trillions of dollars.
To summarize some of the key talking points:
- If we could round up all the U.S. currency in existence–every dollar bill, every quarter, every penny–we’d still need another $18 trillion
- The total value of all gold mined in human history is $11 trillion – only slightly more than half of our current national debt
- Today, the average person is born over $61,000 in debt
And of course, with great debt, comes great responsibility….and consequences.
For starters, there’s the annual $250 billion in interest we as taxpayers have to pay thanks to our massive debt. That’s nearly equal to how much corporate tax revenue the U.S. Treasury brings in each year (last year it was roughly $300 billion). And while we need a vibrant economy with plenty of taxpayers (and few on the dole) to pay back the debt, high debt is destructive to the economy.
A landmark study by Harvard economists Kenneth Rogoff and Carmen Reinhart found that while countries with debt burdens below 30% of GDP (the size of their economies) grew on average of 4.2 percent a year, that growth dropped down to 3% and 2.9% when debt relative to the economy increased to 30-60%, and 60-90%, respectively. Once debt exceeds 90% of the size of the economy, growth falls down another peg.
A separate study published in 2013 that aimed to poke errors in Reinhart and Rogoff’s study found nearly the same result.
The implications are staggering.
A nation with debt less than 30 percent of GDP can expect their economy to double every 16.85 years, while a nation with debt that’s greater than 90% of GDP will double only once every 43.6 years. With our national debt topping $20 trillion, but our annual GDP at around $19.3 trillion, our debt is currently larger than the size of our entire economy’s annual output.
Trump’s goal is to bring us back to the good ol’ days of 3% economic growth. To do that, he has another swamp to drain: the federal budget.
What do you think? Is the national debt a huge threat to our economy? Tell us your thoughts below and share this story over Facebook and Twitter!