The debt-clock number you see in the upper-right-hand corner of this page is the federal debt, according to conventional accounting.  You can make it look smaller by counting only the debt that the government owes to the public, and not the debt (held by the Federal Reserve and the “trust funds”) that it is effectively cancelled because the government owes the money to itself.  “Federal debt held by the public” is less than $15 trillion, but it’s growing faster.  It was only $5 trillion at the end of 2007, so it has tripled in the last decade.

The best source for these numbers, and much of what you’ll see below, is the White House Budget Office, which provides a number of wonderful Historical Tables.  Table 7.1 will give you the debt, and the public debt, since 1940.

The deficit is the amount by which we overspend (or, if you prefer, undertax) each year.   In your college economics class you were told that the government would borrow money during recessions to soften each downturn, and that we’d pay back some of that debt as the economy recovered.  Hah!  The official end of the last recession was June of 2009, and we’re still running huge deficits every year;  lately they’ve been getting bigger.  When you hear people say that we should invest more in “infrastructure” to create jobs, they usually mean that they want a bigger deficit and a bigger debt.

Table 1.1 on the White House list gives you the deficits by year.  We’re sorry to have to tell you this, but the $616 billion deficit that it shows for 2016 doesn’t match up at all with Table 7.1, which shows that the federal debt increased from $18.1 trillion at the end of 2015 to $19.4 trillion at end of 2016.  Government accounting is really bad, and 2016 was a particularly bad year because of the trickery that was used to avoid hitting the debt ceiling in 2015.

The government, of course, insists that corporations use good accounting standards.  Good accounting standards would notice that we’re not going to have enough tax revenue in the future to pay for Social Security and Medicare.  The Medicare trustees say that they’ll run out of money in 12 years!   These programs worked fine when there were lots of Baby Boomers paying taxes to support them, but we really can’t afford to have the ‘Boomers retire and start drawing benefits … Former U.S. Comptroller General David Walker says that proper accounting would peg the debt at $65 trillion.

Is a trillion dollars a lot of money?  It’s about $3,100 per American, although we really shouldn’t count older Americans because they had the pleasure of living during those many years in which we spent more than we collected in taxes.  Taxes were lower than they should have been, and spending was higher … Young people will feel, throughout most of their lives, the pain of higher taxes and slashed programs.

So we think it makes sense to talk in terms of the younger half of the population;  Americans who are 38 and younger.   That’s about 160 million people.  The debt is now (in early 2018) at $20.6 trillion, so that’s about When the debt hits $20 trillion, in the very near future, that will be about $129,000 for each young American.

In 2016 we collected about $3.3 trillion in taxes, and that was an all-time record.  It’s possible to collect more in taxes, but we’ve almost never collected more than 20% of GDP—even when the top tax rate was much, much higher.  Table 1.2 in those White House tables will show you that in the early 1960s, when the top tax rate was 91%, we only collected about 17% of GDP each year in taxes.  Today we’re collecting 18% of GDP, with the top tax rate at 39.6%.  That’s where it was in internet-bubble-year 2000, when our tax revenue reached 20% of GDP.

Politicians tell us regularly that they’re going to take care of the poor, the elderly, the young, the middle class, families …. Total it up, and it’s more than 85% of the population.  We can afford to “take care of” 20% of the population, but we can’t “take care of” most Americans.  It’s a happy fantasy that has allowed many politicians to buy their way into office, and we’re going to pay a terrible price. Someday interest rates will go back to “normal” levels, and we’ll have to pay huge interest on a debt that has quadrupled in size.

In our next recession, probably less than 3 years away, our debt will leap upward by several trillion dollars.   It’s going to be a time of panic, because nearly all of the world’s developed nations—across Europe and even (especially), Japan—are in the same bind.  We’ve all been piling up debt, printing money, and driving interest rates to crazy lows.  By then the last recession will be ten years behind us, and we’ll all be struck by the blinding realization that we squandered an entire decade.  We never got our fiscal houses in order so that we’d be ready for the next downturn.