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America's debt and deficit
作者:佚名    文章来源:CNN News    点击数:9    更新时间:2019/12/21 (第13教学周)  

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10 second trivia. Who is the current US Treasury Secretary? Jack Lew, Kathleen Sebelius, Wilbur Ross, or Steven Mnuchin?

The role is currently filled by Stephen Mnuchin, the nation's 77th secretary of the treasury.

One role of Secretary Mnuchin's department is to manage America's public debt, the amount of money the US government owes to other governments, groups, investors, or businesses. Right now, that number stands at $22.9 trillion. The thing that makes that number grow is the deficit, when the government spends more money than it takes in. And America has been doing that for centuries. The only time in history it didn't have a national debt was in 1835 under President Andrew Jackson. On Friday, though, the gap between what the government spends and what it takes in reached $984 billion for a 12-month period ending in September. That's its biggest gap since 2012 when it had been exceeding a trillion dollars for several years. But if US trade disputes with other countries continue and if global growth slows down, as many analysts expect it to, the US deficit could exceed $1 trillion once again next year. Why is it so high? Secretary Mnuchin says wasteful government spending needs to be cut. Also, the tax cuts that were passed in 2017 reduced the government's revenue. But when you're looking at the debt and the deficit that causes it, the numbers are always in flux.

America lives on borrowed money. That's why the terms debt and deficit get thrown around so much. But, of course, they're not the same thing. Let's first start with our definitions. If a government spends more than it takes in in a given year, the difference is called a deficit. Debt, or the debt, is the total sum a government owes. So every year with a deficit, the debt grows larger.

Looking at a chart, we see that in 1950 the debt was around $257 billion. That's compared to now at around $22 trillion. But comparing the debt then to comparing the debt now is a bit like comparing apples to oranges. That's because when you talk about the deficit, you need context. And the first thing to keep in mind -- inflation. With inflation, that $257 billion debt in 1950 suddenly becomes $2.8 trillion in today's money. But you also have to look at the total size of the economy. Our economy has grown tremendously since 1950. We have more money. We have more assets. We have more people. That's why when economists talk about the debt, they prefer to use this number-- the debt to GDP ratio. It takes the total public debt and shows how big it is relative to the gross domestic product. Now if we go back to that debt comparison and instead show the debt as a percentage of the total economy, well, it's a different story.

The US number right now is around 106%, which is the highest it's been since World War II. And if you're wondering if that number is too high, well, there's no simple answer. Some economists say 85% is too high. Some say 100%. Some say even higher. But regardless of which number is right, economists agree these are the numbers you should be looking at.
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