Governments routinely find themselves spending beyond what tax revenue alone can cover — it's a tale as old as fiscal policy itself. In those situations, the Federal Government bridges the gap by borrowing money to fund the resulting deficit. When fortunes reverse and a surplus materializes, that borrowed money gets paid back.
But on October 23, 1981, the United States crossed a staggering threshold: the national debt officially hit $1 trillion. To wrap your head around that number, consider this — every single American man, woman, and child would need to shoulder $4,700 in personal debt to match it. And if the country managed a surplus every year going forward? It would still take an astonishing 31,688 years to pay it all off.
Nobody anticipated a debt crisis of this magnitude when Reagan entered the White House armed with anti-deficit policies. Yet the march toward that 13-digit figure became unavoidable as the government poured enormous resources into defense spending. All the while, congress was rolling out the biggest tax cuts in history, and the US treasury kept borrowing heavily to prop up a budget deep in deficit territory.
For days leading up to the milestone, the debt figure hovered at $999.3 billion, tantalizingly close to the symbolic trillion-dollar line without crossing it. The number held steady because treasury securities being redeemed and those being issued essentially canceled each other out.
Fun Facts:
- The federal debt was at 18% after World War II. However, it rose by 33.5% during the Bush and Reagan regimes.
- The US National Debt hit its lowest: -$37,513 in 1835. The budget deficit began to rise mainly due to military spending.
- The public debt reached 1 trillion dollars after 205 years.
- When Reagan took office, the GDP had reached 32.5%, the lowest since 1931.