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The federal or national debt is the total sum of the public outstanding debt and the intragovernmental holdings. Therefore, based on the definition, the current national debt of U.S stands at USD 15,584,905,894,127.28 (U.S. Department of the Treasury, Bureau of the Public Debt n.d). ‘Intragovernmental holdings’ is the financial debt which a federal government owes itself (U.S. Department of the Treasury, Bureau of the Public Debt. 2011).
Most of the government spendings are usually financed through borrowed funds from the treasury. A good example of Intragovernmental holdings is the social security fund which at the same time is categorized as the largest source of the federal government’s funds.
The intergovernmental holdings comprise special funds, revolving funds, and government trust funds which are part of the Government Account Series (U.S. Department of the Treasury, Bureau of the Public Debt 2012).
Based on the current statistics, the Intergovernmental holdings of the U.S stand at USD 4,753,652,321,246.69 which is an equivalent of 31% of the federal/national debt (U.S. Department of the Treasury, Bureau of the Public Debt 2012). Given the current economic situation in the country, the decline is not expected to decline any soon.
In fact based on the U.S. Department of the Treasury, Bureau of the Public Debt reports, the debt may continue to incline unless some measures are taken which would reserve the current economic situation. However, since the US economy has started to experience some positive growth, the debt may slightly but not much decline in the near future as the exact time is unpredictable.
In the last 30 years (that is, from 1982 to 2012), the deficit and debt were reported to have a largest percentage of GDP in 2009 where a deficit of 10.1%, and a gross debt of 85.2% and a public debt of 54.1% were reported (Department of the Treasury and Office of Management and Budget 412).
During the period of 1940 and 1943, the deficit increased from 3.0 to 30.3 which was almost a ten-fold. By 1943, the debt gross federal and the public debt were almost equal with a difference of 0.8% (Department of the Treasury and Office of Management and Budget, 412).
In the last five years, the deficit and the public debt has been increasing on a yearly basis and in large numbers compared to both 1980s and 1990s. For instance, the furthest the deficit reached in 1980s and 1990s was 6.0 compared to the last five years where it went to over 10%. Since 1938, the federal government reported a surplus 11 times with 2001 being the last time a surplus was recorded by the federal government.
The year 2011 has been adopted as it is the most recent complete year to calculate the percentage outlays per category.
The year 2011 has a deficit of -1,326.9 on on-budget and off-budget. Based on figures above, as the Head of the President’s Council of Economic Advisors the amount allocated to department of defense/ military, international and social security would be cut to manageable portions. The reason is that despite the efforts to reduce the deficit, these three categories have been experiencing outlay increase for the last couple of years compared to the other categories.
Cutting department of military spending would mean that most of the soldiers in different countries keeping international security would head home. On international affairs, less international affairs would be carried. Social security would mean that welfare in U.S reduces which would affect the people under welfare. On the positive side, deficit would be reduced hence reducing government borrowing.
Works Cited
Department of the Treasury and Office of Management and Budget 2012, Federal Receipts, Outlays, Surplus or Deficit, and Debt, as Percent of Gross Domestic Product, Fiscal Years 1939–2013. Web.
Department of the Treasury and Office of Management and Budget 2012, Federal Receipts and Outlays, by Major Category, and Surplus or Deficit, Fiscal Years 1945–2013. Web.
U.S. Department of the Treasury, Bureau of the Public Debt. The Debt to the Penny and Who Holds It. Web.
U.S. Department of the Treasury, Bureau of the Public Debt. 2012. Intragovernmental Holdings and Debt Held by the Public. Web.
U.S. Department of the Treasury, Bureau of the Public Debt. 2011. Frequently Asked Questions about the Public Debt. Web.
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