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How Big is the National Debt...Our Hero Zero

How Big is the National Debt...Our Hero Zero

February 20, 2024

A common problem when trying to explain, discuss, or understand our national debt is the fact that we must try to visualize numbers that are incomprehensively larger than we typically use in real life. Few of us have ever written a check that includes more than three, four, or five zeros (more on zero in just a moment).

When trying to understand the amount of money flowing into the federal government in taxes, and flowing out in government programs and interest expenses, we have to think in billions and trillions. These are numbers that don’t occur in our daily lives. It is hard for our brains to compute and understand what this really means. 

As a reminder, 1 billion is the equivalent of 1000×1,000,000. It is a one followed by nine zeros or 10 to the ninth power. To visualize how big $1 billion is, if you had a stack of $1 bills, it would reach 358,510 feet or 67.9 miles high.

Source: Science Museum of Virginia

We decided to explore issues related to our national debt using a few classic episodes from Schoolhouse Rock to help us frame the issues. If you missed our first episode, we Unpacked Our Adjectives to try to help describe issues related to our ever-growing national debt. You can access this blog post at the link below.

The Federal Debt, Unpack Your Adjectives

Source: D23

Since the national debt is so big, it makes it hard to understand or fathom. So, we thought it would make sense to go back to one of the first Schoolhouse Rock episodes that aired in January 1973, My Hero Zero. In the episode, a young boy dresses up as a superhero to show his older sister Maggie the importance of the number 0. It should be noted that this song was voted #11 of the 65 Schoolhouse Rock episodes on its 30th anniversary DVD.

For those of you, who would like a reminder, or just want to hum along, a YouTube link to the video is included below.

My Hero Zero - Schoolhouse Rock

Maggie: What’s so wonderful about a zero? It’s nothing, isn’t it?

Narrator: Sure, it represents nothing alone.

The place is zero after one, 

and you’ve got yourself a 10.

See how important that is?

When you run out of digits,

You can start all over again.

Unfortunately, it seems that everyone on Capitol Hill, regardless of which side of the aisle you are on, seems very comfortable starting all over again, adding to our ever-growing debt burden.

It has become painfully obvious since the turn of the millennium, that we need a lot of zeros to describe our national debt. As a reminder, our national debt first crossed $20 trillion in September 2017. As we were crossing the threshold into calendar year 2024, our national debt was crossing $34 trillion. It seems hard to believe that when President Joe Biden and then House Speaker Kevin McCarthy signed the debt deal in early June, just seven months ago, our debt was at $31.4 trillion.

Place one zero after any number,
And you've multiplied that number by 10.
See how easy that is.
Place two zeroes after any number,
And you've multiplied that number by 100.
See how simple that is.
Place three zeroes after any number,
And you've multiplied that number by 1,000.

Et cetera, et cetera, ad infinitum, ad astra, forever and ever,
With zero, my hero, how wonderful you are.

To illustrate, it takes approximately 32,000 years to equal 1 trillion seconds. A stack of $1 trillion $1 bills would stretch nearly from the earth to the sun. It would take a military jet flying at the speed of sound 14 years to distribute a stack of money this large.

If you run a business or simply must balance your household checkbook, you know that you need to have at least as much money coming in as you have going out or you will have a big problem in short order. The federal government seems to have forgotten this, as you can see in the chart below. 

The government brought in $4.4 trillion of tax income in fiscal year 2023, which ended on September 30th. Roughly one-half of this came from individual income taxes. More than a third came from FICA taxes used to fund Social Security and Medicare. It is probably surprising to see how little comes from corporate income taxes, and especially estate taxes.

The real issue comes from spending more than $6.1 trillion in fiscal 2023. This led to a shortfall of nearly $1.7 trillion. That amount is added to our national debt along with shortfalls from all previous years. Then interest, which has been rising rapidly since the Fed started raising rates in March 2022, is added to this and compounds the total we owe.

This $1.7 trillion of additional debt is equal to nearly 6% of our GDP. This is nearly double the long-term average for our annual budget deficit. It is extremely important to consider that we have never run deficits like this when we were not in a time of war or financial crisis. It may also mean that we are using all our dry powder, leaving little ammo to use if or when the next real crisis occurs.

I will finish this series with a look at potential ways we could pay for this mess through some combination of higher taxes and/or lower spending. I am not holding out hope for lower spending as we head into an election year. However, there is little chance of addressing, let alone fixing, this issue without looking at both sides of the ledger. Either way, Our Hero Zero is likely to show up many times in these scenarios.

Source: D23

We will use Interjections! to frame the final topic. For those of you who remember the episode from Schoolhouse Rock, you will probably agree it is an appropriate way to put an exclamation point on this incredibly complex and difficult issue. We will continue to keep you informed and in the loop, as we keep “Moving Life Forward” in 2024. 

© 2024 Jesse Hurst

The views stated are not necessarily the opinion of Cetera and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.

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