National debt

National debt is usually considered the sum total of all the money that the government owes to people, companies or institutions it borrowed money from.

All nations have a national debt. Since the beginning of government there has been a national debt. It is not a new thing. Nor is there anything inherently wrong in a national debt. It is a neutral thing -- that can be used to great political advantage depending on how you count it up, and how you account for paying it. There are many ways to calculate the national debt, which means it is a political football.

Government savings bonds are part of the national debt. As are loans from banks, and what in America are called Treasury Bills (T-Bills). But it is also in unfunded liabilities like pension plan payments and by some measures, Social Security. Bonds sold for infrastructure projects are also part of the national debt. Some economists, but not all, include sums related to bills the government must pay for goods and services it has contracted for in the current fiscal year.

There is a question among economists in the United State as to whether the debt held by the 50 individual states is really part of the "national debt."

One way to calculate the national debt is the absolute number -- for instance the United States Congress, as it does virtually every year -- increased the dollar amount of debt allowable by law to just shy of Three Trillion Dollars ($3,000,000,000,000) for the fiscal 2004 year. This is done to take into account current government borrowing to pay for deficit spending. However, some of this money isn't payable for 10, 20 or 30 years, so we aren't actually paying this money out at one time.

Another way is by the percentage of debt in relation to the Gross Domestic Product. By this measure the national debt is actually falling, because the economy is growing a little faster than the accummulated debt is growing.

Yet another way is by the amount payable in any given year. As a down-home example, if you owe $50,000 on a mortage that is payable over 30 years -- is your debt $50,000? Is it the $50,000 plus the interest? Or is it the actual amount you pay this year and not the whole amount? Your answer determines as whether you can 'pay' the debt. And debts you can pay can't be all that bad.

With the definition shifting of what exactly do you mean by the national debt it them becomes easy to argue in political debate the way that suits your purpose.

In several cities around the United States, but most famously at the corner of West 43rd Street and Sixth Ave (Avenue of the Americas)in New York City, there are national debt clocks -- electronic billboards which supposedly show the amount of money owed by the government. These show different numbers because being politically motivated they count the debt in different ways.

There are different ways to lower, or pay off, the national debt. Though, if you consider Social Security as part of the national debt of the United States than the debt can never be totally paid off.

One is through increased tax revenues. Another is to not incur new debt, and use current revenues to pay off the bonds sold and the loans taken. The most insidiuous and destructive way is through inflation -- which is nothing more than the government printing money. Some countries have tried this route, usually with disatrous results.

National Debt can be held by the citizens of the country, or by institutions outside of the country. Unlike the debt of a corporation though, a holder of the debts owed by governments can't force the government into bankruptcy to pay the debt.