A BRIEF REVIEW OF THE GROWTH OF THE US NATIONAL DEBT JUST THE NUMBERS, NO POLITICS By V. Laxmanan, Sc. D.

Summary
We have some good news that all Americans can cheer about! A brief review of the growth of the US National Debt, since it was fully paid off in January 1935, when Andrew Jackson (see your $20 bill) was President, is presented here. The US national debt D can be shown to increase with time t following a simple linear law D = At +B if we consider the more recent period, since the debt crossed the $1T (one trillion mark) between fiscal years ending 1981 and 1982. The slope A of the line is of interest and is the rate of increase of the debt. This has decreased significantly although the absolute debt D is still rising and was $17.4 T (trillion) on February 24, 2014 (the last date for which debt figure is available as of this writing on Feb 26, 2014). For example, between 2006 and 2010, D = 1768.5t 3,542,357 and the debt was rising at a high rate of $1768 billion per year, or $1.77 T per year as measured by the slope A of this line segment. Then, since 2010, the D-t graph is described by the equation D = 1132.6t -2,263,803 and has a significantly shallower slope, of $1133 billion per year, or 1.13T per year. The rate of growth of the US national debt, as measured by the slope A has therefore decreased significantly since 2010, in spite of what appears to be a totally dysfunctional political climate.
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Introduction My Facebook posts yesterday (see at the end) on the following two topics got me thinking about the growth of the US National debt once again (see also earlier articles on this topic [1-4]) and heres the updated version. 1. The recent finding of gold coins by California couple of denominations $5, $10, $20 (it was found buried in their property while they were walking their dog) from the good old days when such coins were in circulation; the coins date back to the 1850s and 1860s, following President Andrew Jacksons paying off the US national debt (which was $0 on January 8, 1835) 2. The high tax burden of ordinary middle class wage earners of India (55%); the NDTV article stated that this higher than taxes paid by the wealthy in the US; actually in the US there was no income prior to 1913 and taxes were levied only on luxury items, alcohol, tobacco and goods imported from aboard (tariffs) a constitutional amendment was needed to allow the federal government to tax income, which passed just before Woodrow Wilson (the only PhD to occupy the White House) was elected President. Wilson used the power of taxation effectively, increasing the top tax rate from 7% to 77% (with Republican support) in order to keep deficits a minimum and the deficit spending was mostly used to build the US Navy and make it a world power.

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Table 1: Significant Milestones in the Growth of the US National Debt (Since it was fully paid off in 1835)
Date/Year Jul 1, 1863 Jul 1, 1913 Jun 30, 1931 Jun 30, 1945 Sep 30, 1981 Sep 30, 1982 Sep 30, 1986 Sep 30, 1992 Sep 30, 2006 Sep 30, 2008 Sep 30, 2009 Sep 30, 2010 Sep 30, 2011 Sep 30, 2012 Sep 30, 2013 Feb 24, 2014 US Debt in dollars 1,119,772,138.63 2,916,204,913.66 16,801,281,491.71 258,682,187,409.93 997,855,000,000.00 1,142,034,000,000.00 2,125,302,616,658.42 4,064,620,655,521.66 8,506,973,899,215.23 10,024,724,896,912.40 11,909,289,003,511.70 13,561,623,030,891.70 14,790,340,328,557.10 16,066,241,407,385.80 16,738,183,526,697.30 17,413,220,474,647.90 US Debt $, billions 1.12 2.92 16.80 258.68 997.86 1142.03 2125.30 4064.62 8506.97 10024.72 11909.29 13561.62 14790.34 16066.24 16738.18 17413.22 Brief Comments Just the facts, no politics President Lincoln, Civil War President Wilson, World War I Great Depression, President Hoover President FDR, World War II President Reagan, 1st term Crosses $1T mark (actual date Oct 22, 1981) More than a doubling in just 4 years President Bush Sr., Quadrupled since 1981 President Bush, Jr. Iraq-Afghan wars, doubled since 1992 President Bush, Jr. Financial Crisis hits USA President Obama first year in office Unemployment at highest levels since Depression Crosses $16T, 16 times the 1981-982 level Last date of debt figure (as of Feb 26, 2014)

Data source: http://www.treasurydirect.gov/NP/debt/current $1T (trillion) on Oct 22, 1981, see http://www.politico.com/news/stories/1007/6436.html

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US National Debt, D [$, billions]

20000 18000 $17.41T, 2/24/2014 16000 14000 12000 10000 8000 $0, 1/8/1835 6000 4000 2000 0 1820 1840 1860 1880 1900 1920 1940 1960 1980 2000 2020

Time, t [Calendar year]

Figure 1: Growth of the US National Debt since it was fully paid off (under President Andrew Jackson) in 1835. The linear equation D = At + B describes the trend with two line segments. The slope A and intercept B are determined from (1981, 2007) and (2007, 2014) data points.

US National Debt, D [$, billions]

20000 18000 D = At + B 16000 1203.55t 22,579.5 14000 12000 10000 D = At + B 8000 300.36t 594,250 Method of calculating slope A and intercept B 6000 is explained in 4000 Appendix 2000 0 1960 1968 1976 1984 1992 2000 2008 2016 2024

Time, t [Calendar year]

Figure 2: Growth of the US National Debt in recent years after it crossed the $1 T (one trillion) mark between Sep 30, 1981 and Sep 30, 1982, with President Reagan in office. D = 300.36t 594,250 from 1981 to 2007 and D = 1203.55t 22579.5 from 2007 to Feb 2014. The slope has increased from $300 billion per year to $1204 billion per year (i.e., $1.2T per year) since 2007.
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US National Debt, D [$, billions]

25,000 20,000 15,000 10,000 5,000 0 2004

Method of calculating slope A and intercept B is explained in Appendix

D = At + B 1132.6t 2,263,803 D = At + B 1768.5t 3,542,357

2006 2008 2010 2012 2014 2016 2018

Time, t [Calendar year] Heres the good news that all Americans should cheer!
Figure 3: A more detailed consideration of the recent growth of the US National Debt between 2006 and Feb 24, 2014. The dashed line D = 1768.5t 3,542,357 has a steep slope of $1768 billion per year, or $1.77 T per year. The solid line D = 1132.6t -2,263,803 has a significantly shallower slope, of $1133 billion per year, or 1.13T per year. The rate of growth of the US national debt, as measured by the slope A has therefore decreased significantly since 2010, in spite of what appears to be a totally dysfunctional political climate.

Append ix: Method of calculating slopes

Slope of Intercept line A = B = D - At D/t 2014 and 2006 8906.25 7.4 1203.55 -22,579.5 2006 and 1981 7509.12 25 300.36 -594,250 2008 and 2010 3536.9 2 1768.5 -3,542,347 2010 and 2014 3851.6 3.4 1132.6 -2,263,803 Graphs are in Figures 2 and 3. The general equation of a straight is y = mx + c. The slope m = (y2 y1)/(x2 x1) can be determined from any two (x, y) pairs. The intercept c = y2 mx2 = y1 mx1 is fixed once m is known. The US tax code is also a series of straight line with increasing slope m. (D, t) pairs Change in debt, D Change in time, t

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US National Debt, D [$, billions]

18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013

D = At + B 1768.5t 3,542,357

Time, t [Calendar year]

Figure 4: These graphs are included for those might find the attempt to join two points with a straight line a bit simplistic. Here we have an expanded view of the data from 2006 to 2010 (see Table 1). This is the dashed line of Figure 3. The slope A and intercept B were deduced from the two extreme points on the line. The third point (the middle one) clearly falls on this same line. The debt was actually higher in 2006 relative to this reference line.

US Debt, D [$, billions]

25000 20000 15000 10000 5000

y = 1094.1x - 2E+06 R = 0.9894

0 2006

2008

2010

2012

2014

2016

2018

Time, t [Calendar year]

Figure 5: These dashed-dot line here is the linear regression line (least squares method) generated automatically by the Microsoft Excel program. It is virtually indistinguishable from
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D = 1132.6t 2, 263,803 deduced by joining the two extreme points. The slope A = 1094.1 is slightly lower since all the data points have been included to arrive at the slope to minimize the squares of the vertical deviation of each point from the best-fit line. However, this slope will keep on changing depending on how many data points we choose to include. The method of joining the extremes is equivalent to considering the average rate of change between the end of fiscal year 2010 to the present.

US Debt, D [$, billions]

25,000 20,000 15,000 10,000 5,000 0 2004

y = 1257.6x - 3E+06 R = 0.987

2006

2008

2010

2012

2014

2016

2018

Time, t [Calendar year]

Figure 6: A linear regression analysis (least squares method) including all the data from 2006 to February 24, 2014 reveals a strong correlation coefficient of r2 = 0.987. A perfect correlation would yield r2 = +1.000 with all points falling on the line. The slope A = $1257.6 billion per year ($1.26 T per year) is slightly year than for the most recent period but is significantly lower than $17 68.5 billion per year, for first period considered here.

Earlier Articles Posted on the US National Debt and Economic Situation (Unemployment data analysis)

[1]

V. Laxmanan, The US National Debt and the Long Term, Published September 2, 2012 http://www.scribd.com/doc/104659108/The-USNational-Debt-and-the-Long-Term
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[2]

[3]

V. Laxmanan, The US National Debt in January 2013: A Fresh Start, Published January 24, 2013, http://www.scribd.com/doc/121955182/US-National-Debt-in-January2013-A-Fresh-Start V. Laxmanan, A Brief Review of the Growth of the US National Debt: Just the Numbers, No Politics, Published February 26, 2014, http://www.scribd.com/doc/209325140/A-Brief-Review-of-theGrowth-of-the-Us-National-Debt-There-s-Good-News-to-Cheer-About

The Bibliography lists given below have links to all the articles dealing with the US National Debt, Budget, Deficits, Unemployment rates, and analyses of corporate financial data. [4] Laxmanan, V., Bibliography I of Articles by V. Laxmanan on the Extension of Plancks and Einsteins Ideas on Energy Quantum to Topics Outside Physics, compiled April 16, 2013, http://www.scribd.com/doc/136492067/Bibliography-I-Articles-onthe-Extension-of-Planck-s-Ideas-and-Einstein-s-Ideas-on-EnergyQuantum-to-topics-Outside-Physics-by-V-Laxmanan Laxmanan, V., Bibliography II of Articles by V. Laxmanan on the Extension of Plancks and Einsteins Ideas Beyond Physics with Examples from the observations on financial, economic, social, and political systems, compiled June 16, 2013, http://www.scribd.com/doc/147955814/Bibliography-II-of-VLaxmanan-Articles-on-the-Extension-of-Planck%E2%80%99s-andEinstein%E2%80%99s-Ideas-Beyond-Physics-with-Examples-fromthe-Observations-on-Finan

[5]

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My Facebook Posts on February 25, 2014

Vj Laxmanan shared a link via Sriram Parthasarathy.

9 hours ago (~ 1:30 AM, 2/26/14)

We have to take power away from the government to tax INCOME. Tax should be on consumption, with no taxes on basic necessities of life so the poor are not hurt by so called consumption taxes. Even in the US, there was no INCOME tax prior to 1913. Taxes were levied only on luxury items, alcohol, and tobacco and on goods imported from abroad. A constitutional amendment was needed to allow the federal government to levy taxes on income. It passed just before Wilson became President. President Woodrow Wilson (the only PhD to occupy the White House) used it very effectively during World War I - mainly to build the US Navy and make the US a world power. He increased the top tax rate from 7% to 77% (of course, with Republicans backing since he wanted to keep deficits a minimum). Since Wilson, military spending in the US has kept mushrooming and now when we talk about cuts in military spending there is a visceral reaction to it among Republicans and tea partiers. Income taxes must go down to zero, military spending must go down (like GM decided to trim when market share went down, the US should not be the policing the world) and we must go to a consumption based tax as it was prior to 1913 . Instead, the Republicans want to keep shafting the poor and reduce spending on food stamps when unemployment rate (the real one with baby boomers dropping out of the labor force altogether) is high. Sad state of affairs here in this US. 55% of income taxes to a corrupt system, by middle class wage earners of India is too high - way too high!

Salaried Indians pay more income tax than high earners in US, China: survey profit.ndtv.com Indians took roughly 55 per cent of their wages home, the survey said. In comparison, earners in Saudi Arabia took 97 per cent of... Like Promote Share

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Vj Laxmanan 8 hours ago Edited (as ~ 1:30 AM on 2/26/14)

TWO HISTORY LESSONS IN ONE DAY (And WALK YOUR DOG!) I just shared a link on the high taxes (55%) being paid by salaried (middle class) Indian wage earners. That is too high. Even in the US there was no income tax before 1913. Here's another lesson. There was no paper money either if we go back to 1835 when Andrew Jackson was President (he is on the $20 bill). The US national debt was briefly zero, $0. Jackson paid off the US national debt by selling government land (to the railroads which were expanding west) and he insisted on government getting paid by gold and silver coins - he did not like paper money - but then the banks wanted it otherwise and a lot of things happened and we now have a national debt of $17.2 trillion (up from $0 to $17.2 T in less than 150 years!) Now a California middle aged couple has found $10 million worth of gold coins on their property, back from those good old days when gold coins with denominations of $5, $10, $20 were in circulation. http://l.yimg.com/bt/api/res/1.2/ynrt3rMVSUEntdqrVmnn2A-/YXBwaWQ9eW5ld3M7Zmk9ZmlsbDtoPTk1NztweW9mZj0wO3E9NzU7dz03MzE/http://media.zenfs.com/en_us/News/ap_webfeeds/fb217a9ae6ccda074c0f6a706700b6bf.jpg Like Promote Share

Radha Akkoor likes this.

Vj Laxmanan Here's http://gma.yahoo.com/.../california-couple-finds-10m... California Couple Finds $10M Buried Treasure in Back Yard gma.yahoo.com A California couple spotted the edge of an old can on a path they had hiked many times before. Poking at the can was the first step in uncovering a buried treasure of rare coins estimated to be worth $10 million. It was like finding... 6 hours ago Like Remove Preview Bottom of Form
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