Letter to the Editor: Debt ceiling drama shouldn’t worry us too much


A recent commentary by Thomas L. Knapp, “What’s behind all the debt ceiling drama?” (March 1) did well to use the word “drama.” But let me offer a better story.

My essay here follows both Knapp’s comments, as well as a number of very cordial lunches with a new and very respectable lunch acquaintance, who is a good person and knowledgeable about things, but I thought he was worrying a little too much about the national debt. All my information below can be easily verified by internet search.

First, yes, government debt is around $31 trillion. But the total debt of U.S. corporations is $24 trillion, and the total U.S. “household” debt is $15 trillion (two-thirds of this is mortgage debt, while the rest is debts on credit cards, student loans, equity, etc.). So, really, total private-sector debt is higher than our government debt (24+15=39), and it is getting worse, too. A rough look at graphs of the growth in household debt and corporate debt over recent years shows increases of maybe 3%-4% per year and maybe 9% per year, respectively.

But government debt, as measured by the ratio of debt-to-gross domestic product, actually is cyclic and is linked to such things as various programs and war needs, as well as how well the economy is doing. An internet search of “2010_08_05_federaldebt.pdf” should take you to the Congressional Budget Office website, where you can get this one-page summary, free download of the U.S. debt-to-GDP ratio since 1790. In 1790, public debt was about 30% of gross domestic product. From that day to today, that percentage went up and down in connection with various economic and historical situations. The U.S. debt problem was actually worse during World War II. So I am not very worried.

Second, usually almost nobody complains when this government debt-to-GDP goes down. But, looking further on the internet, I found many countries — including China — with higher government, corporate and household debt levels than the USA. Well, that just means that the whole rest of the world is doing the same thing we are doing, or more of it. And I am sure those countries have their own people squabbling about what to do or not do. So do we really need to worry very much?

Lastly, consider yourself going to your bank and asking for an increase in your credit card limit. What are the chances they would answer: “How much do you want?” But you are in control of your debts. And corporations? They would just print corporate bonds and sell them. And, using their corporate “magic accounting boxes,” just increase the number in their price tags, and you cannot control that.

Worry about your own pennies, not the national debt.

Arthur E. Sowers


Members and subscribers make this story possible.
You can help support non-partisan, community journalism.