Gigantic Run-up of Federal Debt for What?
By Robert Higgs • Wednesday February 6, 2013 12:15 PM PDT • 7 Comments
At the end of fiscal year 2008, the federal debt held by the public was about $5.8 trillion. By the end of fiscal year 2012, it had grown to about $11.3 trillion. Thus, in just four years, it had nearly doubled: the government ran up almost as much debt in four years as it had accumulated during the entire previous history of the nation. The additional debt amounts to more than $18,000 for every man, woman, and child in the United States, or more than $73,000 for a family of four. If the typical family had just run up this amount of personal debt, the head of household certainly would be losing sleep wondering how so much additional debt can possibly be handled.
In view of this astonishingly large additional burden the government has loaded onto the public, who must shoulder the responsibility for servicing and repaying it, one might well ask: what has the public received in return? This question, of course, cannot be answered in an aggregative manner because the public consists of diverse, differently situated persons, who differ in their receipt of government services and their valuation of those services.
It seems safe to say that some people—those on whom large government payments or other benefits were showered—may consider their share of the additional debt burden to be a good deal. For most people, however, this judgment seems highly unlikely. Ask yourself, If left to your own decisions, would you have voluntarily chosen to go into so much debt in order to obtain the identical additional services the government has supplied to you during the past four years?
To make matters worse, many of us consider the government’s “services” financed by its recent debt-financed binge to have, on balance, no benefit at all. We consider much of what the government purchases to have either no worth or negative worth—that is, we actually abhor much of the government’s activity and wish it would go away. For all of us in this group, the additional debt burden, whose pro rata share we cannot avoid, constitutes not only a burden, but a gross insult and abuse. It is bad enough that the government wastes money. It is far worse that it burdens us in order to annoy, trouble, and infuriate us. For many of us, therefore, this huge run-up of government debt has only added insult and injury in monstrous amounts to the insult and injury under which we were already groaning.
Tags: Budget and Tax Policy, Economics, The State 
Prof Higgs:
Good snap shot of a disastrous situation.
For what indeed?
For all intents and purposes, the US economic system looks like nothing so much as a perpetual debt/war machine. Another good term that I have heard is a “fiscal-military state.”
Whatever we choose to call it, we have created a monster which must be reined in. That the actions of this monster are unsustainable is obvious, though one would never know this by listening to US politicians or MSM happy talk.
Financial Armageddon is the end of this train ride, and maybe WWIII?
It’s time for Americans to admit that this debt CANNOT be repaid and, therefore, must be repudiated. The investors who are involved in this (including China) cannot expect to buy US Treasuries without risk. Nothing is without risk.
Martin Faries | Feb 6, 2013 | Reply
I have no desire to downplay the terrible significance of the massive federal debt, but comparisons to past years should be based on inflation-adjusted dollars. The graph still would show a massive rise in 2009.
MingoV | Feb 6, 2013 | Reply
Mingo V,
When the rate of inflation is quite low, as it has been throughout the period shown in the graph, and the nominal changes are gigantic, adjustment for inflation would make no difference at all for my purposes. A graph of the inflation-adjusted debt would look very similar to the one I displayed. There are times when inflation adjustment is necessary, but this is not one of them.
Robert Higgs | Feb 9, 2013 | Reply
Obama is cashing in on the prevailing philosophy in America and the world, which, to paraphrase Ayn Rand, is mysticism-Altruism-collectivism.
It holds that if one wants to be “good” one must hold the interests of others above one’s own.
This justifies Obama’s spreading of the wealth to those in need.
To his way of thinking the needs of others takes precedence over your right to keep the fruit of your own labor. You are considered to be a sacrificial animal to be taxed and regulated, licensed and permitted, drafted and exploited, by the State.
There is a movement of young people in the colleges and universities which is growing across the country and the world and which is studying the ideas which are necessary to challenge the prevailing wisdom.
It is the Students for Liberty is my hope for the future.
http://studentsforliberty.org/
I urge you to support them with your donations and let others know aout them.
William | Feb 10, 2013 | Reply
William, Thanks for your comment but i would suggest that Rand’s “Objectivism” is seriously flawed, and as a naturalist, her views are self-refuting. The ideas of liberty are grounded in the natural law tradition, not the quid-pro-quo, utilitarianism of “ethical egoism.”
Here are a few articles calling into question Randian views:
“Ayn Rand and War: Natural Bedfellows?”, by Jonathan Bean
“The Moral Poverty That “Self-Esteem” Requires War,” by David Theroux
“War and the Common Good,” by Anthony Gregory
I would suggest the following book as a defense of natural law and a critique of subjectivism/relativism in epistemology, aesthetics and ethics:
The Abolition of Man, by C.S. Lewis
David J. Theroux | Feb 10, 2013 | Reply
Ever since the beginning of the 20th century, politics has become gradually more and more ‘professionalised’. Gaining and hanging on to power has become more important than the judicious exercise of good government. Politicians are thus much more in thrall to the electors, the lobbyists and the pork barrellers (pork-barrellistas?).
The way to buy votes nowadays is to overspend other people’s money as happened in the UK in about 2001/2 when the Chancellor (Gordon Brown) abandoned the balanced budgeting that had been beqeathed to him by the Tory government in 1997. We have been getting into deeper and deeper debt ever since. I remember saying at the time that it would all end in tears. Didn’t it just?
John Harrison | Feb 12, 2013 | Reply