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Charting America’s Debt: $27 Trillion and Counting

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America's Debt Infographic

Why America’s Debt Doesn’t Stop Growing

Public sector debt has been a contentious topic for many years. While some believe that excessive government borrowing can be harmful over the long term, others have argued that it acts as a powerful tool for stimulating growth.

In the U.S., the latter view appears to have taken hold. Since 2008, America’s national debt has surged nearly 200%, reaching $27 trillion as of October 2020. To gain a better understanding of this ever-growing debt, this infographic takes a closer look at various U.S. budgetary datasets including the 2019 fiscal balance.

America’s Debt vs. GDP

Government debts are often represented by incredibly large numbers, making them hard to comprehend. By comparing America’s debt to its annual GDP, we can get a better grasp on the relative size of the country’s financial obligations.

YearTotal Public Debt (USD)GDP (USD)Debt as % of GDP
1994$4.5T$7.1T63%
1995$4.8T$7.5T64%
1996$5.0T$7.9T63%
1997$5.3T$8.4T63%
1998$5.5T$8.9T62%
1999$5.6T$9.4T60%
2000$5.8T$10.0T58%
2001$5.7T$10.5T54%
2002$5.9T$10.8T55%
2003$6.4T$11.2T57%
2004$7.0T$11.9T59%
2005$7.6T$12.8T59%
2006$8.2T$13.6T60%
2007$8.7T$14.2T61%
2008$9.2T$14.7T63%
2009$10.6T$14.4T74%
2010$12.3T$14.7T84%
2011$14.0T$15.3T92%
2012$15.2T$16.0T95%
2013$16.4T$16.6T99%
2014$17.3T$17.1T101%
2015$18.1T$18.0T101%
2016$18.9T$18.5T102%
2017$19.9T$19.2T104%
2018$20.5T$20.2T101%
2019$21.9T$21.1T104%
2020$23.2T$21.6T107%
April 2020$23.7T$19.5T122%

Source: Federal Reserve, U.S. Treasury

In this context, 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.

For starters, there are many other advanced economies that have also surpassed the 100% debt-to-GDP milestone. The most noteworthy is Japan, where the debt-to-GDP ratio has climbed beyond 200%. Furthermore, this is not the first time America has found itself in this situation—by the end of World War II, debt-to-GDP peaked at 106% before declining to historic lows in the 1970s.

What’s Preventing the Debt From Shrinking?

Although the U.S. continuously pays off portions of its debt, the total amount it owes has increased each year since 2001. That’s because the federal government runs consistent budget deficits, meaning it spends more than it earns. During economic crises, these deficits can become incredibly large.

Fiscal Year (Sept 30)Budget Surplus or Deficit (USD billions)
2000+$236B
2001+$128B
2002-$158B
2003-$378B
2004-$418B
2005-$318B
2006-$248B
2007-$161B
2008-$458B
2009-$1,412B
2010-$1,294B
2011-$1,299B
2012-$1,076B
2013-$680B
2014-$485B
2015-$441B
2016-$585B
2017-$665B
2018-$779B
2019-$984B
2020-$3,131B

Source: Federal Reserve

In the aftermath of the Global Financial Crisis, the U.S. recorded an annual deficit of $1.4 trillion in FY2009. This was largely due to the $787 billion American Recovery and Reinvestment Act of 2009, which provided tax rebates and other economic relief.

In the economic battle against COVID-19’s impacts, the boundaries have been pushed even further. The annual deficit for FY2020 weighs in at a staggering $3.1 trillion, the largest ever. Contributing to this historic deficit was the $2 trillion CARES Act, which provided wide-ranging support to the entire U.S. economy.

Breaking Down the 2019 Fiscal Balance

Even in the years between these two economic crises, government spending still outpaced revenues. To find out more, we’ve broken down the 2019 fiscal balance into its various components.

Federal Spending

Total spending in FY2019 was roughly $4.4 trillion, and can be broken out into three components.

The first component is Mandatory Spending, which accounted for 62% of the total. Mandatory spending is required by law, and includes funding for important programs such as social security.

CategoryAmount (USD billions)Percent of Total Federal Spending
Health programs$1,121B25.5%
Social security$1,039B23.6%
Income security$301B6.8%
Federal civilian and military retirement$164B3.7%
Other$109B2.5%
Total mandatory spending$2,735B62.2%

Figures may not add to 100 due to rounding. Source: Peter G. Peterson Foundation

The largest category here was Health, with $1.1 trillion in funding for programs such as Medicare and Medicaid. Social security, which provides payments to retirees, was the second largest at $1.0 trillion.

The second component is Discretionary Spending, which accounted for 30% of the total. Discretionary spending is determined on an annual basis by Congress and the President.

Discretionary SpendingAmount (USD)Share of Total Federal Spending
Defense$677B15.4%
Transportation$100B2.3%
Veteran's benefits & services$85B1.9%
Education$72B1.6%
Health$66B1.5%
Administration of justice$59B1.3%
International affairs$52B1.2%
General government$51B1.2%
Housing assistance$49B1.1%
Natural resources and environment$44B1.0%
General science, space, and technology$32B0.7%
Community and regional development$27B0.6%
Training, employment, and social services$23B0.5%

Total discretionary spending


$1,338B


30.4%

Figures may not add to 100 due to rounding. Source: Peter G. Peterson Foundation

At $677 billion, the Defense category represents over half of total discretionary spending. These funds are spread across the five branches of the U.S. military: the Army, Marine Corps, Navy, Air Force, and Space Force.

The third component of spending is the net interest costs on existing government debt. For FY2019, this was approximately $327 billion.

Federal Revenues

Revenues in FY2019 fell short of total spending, coming in at approximately $3.5 trillion. These inflows can be traced back to six categories.

CategoryAmount (USD billions)Percent of Total Revenues
Individual income taxes$1,732B50.0%
Payroll taxes$1,247B36.0%
Corporate income taxes$242B7.0%
Other$104B3.0%
Excise taxes$104B3.0%
Customs duties$69B2.0%
Total revenues$3,464B100.0%

Figures may not add to 100 due to rounding. Source: Peter G. Peterson Foundation

Revenues overwhelmingly relied on individual income and payroll taxes, which together, accounted for 86% of the total. Corporate income taxes, on the other hand, accounted for just 7%.

Is America’s Debt a Cause for Concern?

The general consensus following the events of 2008 is that large fiscal stimulus (supported by government borrowing) was effective in speeding up the consequent recovery.

Now facing a pandemic, it’s likely that many Americans would support the idea of running large deficits to boost the economy. Surveys released in July 2020, for example, found that 82% of Americans wanted federal relief measures to be extended.

Looking beyond COVID-19, however, does reveal some warning signs. One frequent criticism of the ever-growing national debt is its associated interest costs, which could cannibalize investment in other areas. In fact, the effects of this dilemma are already becoming apparent. Over the past decade, the U.S. has spent more on interest than it has on programs such as veterans benefits and education.

us federal net interest costs chart

With low interest rates expected for the foreseeable future, the federal government is likely to continue running its large annual deficits—at least until the effects of COVID-19 have fully subsided. Perhaps after this crisis is over, it will be time to assess the long-term sustainability of America’s rising national debt.

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Politics

Visualizing Biden’s $1.52 Trillion Budget Proposal for 2022

A breakdown of President Biden’s budget proposal for 2022. Climate change initiatives, cybersecurity, and additional social programs are key areas of focus.

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Visualizing Biden’s Budget Proposal for 2022

On April 9th, President Joe Biden released his first budget proposal plan for the 2022 fiscal year.

The $1.52 trillion discretionary budget proposes boosts in funding that would help combat climate change, support disease control, and subsidize social programs.

This graphic outlines some key takeaways from Biden’s budget proposal plan and highlights how funds could be allocated in the next fiscal year.

U.S. Federal Budget 101

Before diving into the proposal’s key takeaways, it’s worth taking a step back to cover the basics around the U.S. federal budget process, for those who aren’t familiar.

Each year, the president of the U.S. is required to present a federal budget proposal to Congress. It’s usually submitted each February, but this year’s proposal has been delayed due to alleged issues with the previous administration during the handover of office.

Biden’s publicized budget only includes discretionary spending for now—a full budget that includes mandatory spending is expected to be released in the next few months.

Key Takeaways From Biden’s Budget Proposal

Overall, Biden’s proposed budget would increase funds for a majority of cabinet departments. This is a drastic pivot from last year’s proposal, which was focused on budget cuts.

Here’s a look at some of the biggest departmental changes, and their proposed spending for 2022:

Department2022 Proposed Spending (Billions)% Change from 2021
Education$29.841%
Commerce$11.428%
Health and Human Services$131.724%
Environmental Protection Agency$11.221%
Interior$17.416%
Agriculture$27.816%
Housing and Urban Development$68.715%
Transportation$25.614%
Labor$14.214%
State and International Aid$63.512%
Treasury$14.911%
Energy$46.110%
Small Business Administration$0.99%
Veteran Affairs$113.18%
Justice$17.45%
Defense$715.02%

One of the biggest boosts in spending is for education. The proposed $29.8 billion would be a 41% increase from 2021. The extra funds would support students in high-poverty schools, as well as children with disabilities.

Health and human services is also a top priority in Biden’s budget, perhaps unsurprisingly given the global pandemic. But the boost in funds extends beyond disease control. Biden’s budget allocates $1.6 billion towards mental health grants and $10.7 billion to help stop the opioid crisis.

There are increases across all major budget categories, but defense will see the smallest increase from 2021 spending, at 2%. It’s worth noting that defense is also the biggest budget category by far, and with a total of $715 billion allocated, the budget lists deterring threats from China and Russia as a major goal.

Which Bills Will Make it Through?

It’s important to reiterate that this plan is just a proposal. Each bill needs to get passed through Congress before it becomes official.

Considering the slim majority held by Democrats, it’s unlikely that Biden’s budget will make it through Congress without any changes. Over the next few months, it’ll be interesting to see what makes it through the wringer.

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Mapping the World’s Key Maritime Choke Points

Ocean shipping is the primary mode of international trade. This map identifies maritime choke points that pose a risk to this complex logistic network.

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maritime choke points

Mapping the World’s Key Maritime Choke Points

Maritime transport is an essential part of international trade—approximately 80% of global merchandise is shipped via sea.

Because of its importance, commercial shipping relies on strategic trade routes to move goods efficiently. These waterways are used by thousands of vessels a year—but it’s not always smooth sailing. In fact, there are certain points along these routes that pose a risk to the whole system.

Here’s a look at the world’s most vulnerable maritime bottlenecks—also known as choke points—as identified by GIS.

What’s a Choke Point?

Choke points are strategic, narrow passages that connect two larger areas to one another. When it comes to maritime trade, these are typically straits or canals that see high volumes of traffic because of their optimal location.

Despite their convenience, these vital points pose several risks:

  • Structural risks: As demonstrated in the recent Suez Canal blockage, ships can crash along the shore of a canal if the passage is too narrow, causing traffic jams that can last for days.
  • Geopolitical risks: Because of their high traffic, choke points are particularly vulnerable to blockades or deliberate disruptions during times of political unrest.

The type and degree of risk varies, depending on location. Here’s a look at some of the biggest threats, at eight of the world’s major choke points.

maritime choke point risks

Because of their high risk, alternatives for some of these key routes have been proposed in the past—for instance, in 2013 Nicaraguan Congress approved a $40 billion dollar project proposal to build a canal that was meant to rival the Panama Canal.

As of today, it has yet to materialize.

A Closer Look: Key Maritime Choke Points

Despite their vulnerabilities, these choke points remain critical waterways that facilitate international trade. Below, we dive into a few of the key areas to provide some context on just how important they are to global trade.

The Panama Canal

The Panama Canal is a lock-type canal that provides a shortcut for ships traveling between the Pacific and Atlantic oceans. Ships sailing between the east and west coasts of the U.S. save over 8,000 nautical miles by using the canal—which roughly shortens their trip by 21 days.

In 2019, 252 million long tons of goods were transported through the Panama Canal, which generated over $2.6 billion in tolls.

The Suez Canal

The Suez Canal is an Egyptian waterway that connects Europe to Asia. Without this route, ships would need to sail around Africa, which would add approximately seven days to their trips. In 2019, nearly 19,000 vessels, and 1 billion tons of cargo, traveled through the Suez Canal.

In an effort to mitigate risk, the Egyptian government embarked on a major expansion project for the canal back in 2015. But, given the recent blockage caused by a Taiwanese container ship, it’s clear that the waterway is still vulnerable to obstruction.

The Strait of Malacca

At its smallest point, the Strait of Malacca is approximately 1.5 nautical miles, making it one of the world’s narrowest choke points. Despite its size, it’s one of Asia’s most critical waterways, since it provides a critical connection between China, India, and Southeast Asia. This choke point creates a risky situation for the 130,000 or so ships that visit the Port of Singapore each year.

The area is also known to have problems with piracy—in 2019, there were 30 piracy incidents, according to private information group ReCAAP ISC.

The Strait of Hormuz

Controlled by Iran, the Strait of Hormuz links the Persian Gulf to the Gulf of Oman, ultimately draining into the Arabian Sea. It’s a primary vein for the world’s oil supply, transporting approximately 21 million barrels per day.

Historically, it’s also been a site of regional conflict. For instance, tankers and commercial ships were attacked in that area during the Iran-Iraq war in the 1980s.

The Bab el-Mandeb Strait

The Bab el-Mandeb Strait is another primary waterway for the world’s oil and natural gas. Nestled between Africa and the Middle East, the critical route connects the Mediterranean Sea (via the Suez Canal) to the Indian Ocean.

Like the Strait of Malacca, it’s well known as a high-risk area for pirate attacks. In May 2020, a UK chemical tanker was attacked off the coast of Yemen–the ninth pirate attack in the area that year.

Due to the strategic nature of the region, there is a strong military presence in nearby Djibouti, including China’s first ever foreign military base.

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