With the passage of the recent American Recovery and Reinvestment Act of 2009 the annual budget deficit took another dramatic leap for the 2009 fiscal year. The deficit was originally projected at $1.2 Trillion dollars, but with the addition of the Stimulus Bill that figure has nearly doubled to a staggering $2 Trillion dollars. This giant deficit will most assuredly add to the already-massive National Debt which is already in the ballpark of $11 Trillion or 60% of GDP. Some fear this consistently increasing number threatens the solvency and sovereignty of the United States of America as a political state. Is this a reasonable concern? Is the solvency of the Republic in danger? The answer is no, the current debt is not a viable threat to the solvency of the state. Though we do not wish to advocate deficit spending, the fact of the matter is that the United States has faced budget deficits and national debt before. The current debt represents approximately 75% of U.S. GDP, yet has been much worse in the past. For example, post World War II the debt reached 130% of GDP. The U.S. debt fares pretty well in comparison to other countries as well, it ranks 23rd in National Public Debt. Japan by comparison, ranked 3rd, has a debt that is an unbelievable 170% of GDP. As outstanding the debt may be, the simple fact remains that no creditor is bold enough to call in American debt. This would only spur a chain reaction in which the U.S., and every subsequent country, would also call in their outstanding loans and the world’s financial system would be left in ruin. No country or creditor would dare inflict such chaos, thus no matter the size of the U.S. National Debt, the solvency of the United States will remain intact. That’s the blessing of being the world’s economic superpower.
"A Short History of the National Debt" By JOHN STEELE GORDON