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Background of US debt: How does it pile up over the years?

08-03-2011 16:36 BJT

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Much has been said about the US debt recently. But exactly how has the world's largest economy managed to accumulate so much debt? Let's have a look at how the debt has piled up over the years.

Fiscal deficit has been the common challenge for all American presidents. And its debt problem appeared as early as the country was founded. Loans to wage the war of Independence was the US government's first debt.

Just when things were about to improve, the Civil War drove the government to the verge of bankruptcy. The subsequent two world wars caused huge military expenditures, adding more pressure to the economy.

Cao Yuanzheng, Chief Economist from Bank of China said, "After World War Two, the US gradually became an indebted economy. That means the country doesn't have enough revenue to cover its spending. It has to issue new bonds to support economic development."

In 1985, the US government used up its savings, becoming a debtor. The then President Ronald Reagan raised the debt limit 17 times during his term.

Wang Guogang, director from Institute of Finance and Banking, CASS said, "Its own interests come first when the US government issues any policies. It won't consider others until its own interests are guaranteed."

Experts say that the debt problem seemed to alleviate during the Clinton Administration. However, good times don't last long. The 9/11 attacks cast a shadow on the US economy and its debt soared to ten trillion dollars. And in the wake of Subprime Crisis, and the government's bailout plans the debt continued to balloon.

President Obama, who took office during the difficult times, hasn't changed the situation. The government's deficit is growing by a trillion dollars a year -- that's trillion, with a "T"

Editor:Li Wanran |Source: CNTV.CN

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