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The National Debt…How Did We Get Here??

The National Debt…How Did We Get Here??

February 13, 2023

On Friday, January 13th, Treasury Secretary Janet Yellen, sent a letter to the new Speaker of the House, Kevin McCarthy, that has all the makings of a scary movie. Unfortunately, we could all be victims in this upcoming psychodrama.

Her letter stated, “the United States will reach its statutory debt limit on Thursday, January 19th, and requested that Speaker McCarthy either suspend or increase the debt limit. She said, ”the Treasury Department will begin taking certain extraordinary measures to prevent the United States from defaulting on its obligations”. She further stated, “it is unlikely that cash and extraordinary measures will be exhausted before early June”. This gives us at least four months to watch this bad movie unfold. 

Congress last increased the federal debt limit in December 2021. The debt limit currently stands at $31.4 trillion. Let that sink in for a moment. According to an article from, dated September 11, 2017, the US national debt reached $20 trillion for the first time ever that month. 

I remember having conversations with clients around that time suggesting that on its current trajectory, the US debt could potentially hit $30 trillion by calendar year 2030. This opinion was almost universally met with disbelief and people telling me that I was too pessimistic.

Then came the COVID-19 pandemic. With both fiscal and monetary policy floodgates thrown open, the debt rose faster than we would have ever could have imagined. According to, the national debt surpassed $30 trillion for the first time in February 2022. This means that the debt grew by more than 50% in less than five years. Apparently, I was way too conservative in my prognostication. Never underestimate what politicians, who do not have to balance the federal checkbook are willing to do.

In the 1980 song by the new wave band the Talking Heads, David Byrne, in his oversize suit, asks the question, “how did I get here?” Byrne has stated that his ad-libbed lyrics and vocals were inspired, at least partially, by watching preachers deliver sermons. A reminder of this very apt question can be seen below along with a link to the song’s quirky music video.



To help frame today’s question from a historical perspective, let’s go back to January 2001. George W Bush had just been inaugurated as President. We had also just survived the threat of ATM machines locking up and airplanes falling out of the sky due to what Y2K would do to computer systems.

We had also run budget surpluses four years in a row. These surpluses were the first in more than 30 years. This happened when a Democratic President Clinton and a Republican Congress led by House Speaker, Newt Gingrich found ways to work together for the good of the American people. We were also in the midst of a tech boom leading to significant economic growth in the latter half of that decade.

Against this backdrop, then Fed Chairman Alan Greenspan testified before the Senate budget committee in late January. Congress was trying to figure out what to do with these government surpluses, which you can see in the graph below.

Source: The Wall Street Journal

Records from the congressional testimony show that Alan Greenspan said the following:

“The most recent projections from the OMB indicate that, if current policies remain in place, the total unified surplus will reach $800 billion in fiscal year 2011, including an on-budget surplus of $500 billion. The CBO reportedly will be showing even larger surpluses.

The most recent projections, granted their tentativeness, nonetheless make clear that the highly desirable goal of paying off the federal debt is in reach before the end of the decade”.

Chairman Greenspan made it clear that paying off the debt was not only possible but desirable. He was confident that one of the biggest decisions that Congress would have to make in the future was what to do with the excess money that had been utilized in paying our debt and the interest on it. He knew that taxes could be cut, which would be massively stimulative to the US economy. He also knew the money could be allocated towards much-needed infrastructure projects. But there was no doubt in his testimony that our federal debt would be paid off by 2010 and the United States of America would be debt-free.

Back to our present reality, we are facing a $31.4 trillion debt ceiling that needs to be addressed in the next few months. This will very likely lead to all sorts of political theater and drama. Some of this may not be good for the financial markets, at least in the short term. And unfortunately, the picture does not look any better further into the future, as you can see from the Congressional Budget Office’s future projections of our national debt.


I am certain that this is something that will be talked about at length throughout the year, and I will revisit this topic soon. However, I wanted to give you, our trusted friends and clients, a framework to understand where we were and how we got here. As this scary movie plays out in the national media over the next few months, we want you to be well-informed as you listen to people on both sides of the aisle, who bear responsibility for our present state. We believe data, information, and math matter as we continue “Moving Life Forward”

© 2023 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.