w the national debt almost triple in the 1970s, to almost a trillion dollars. During Ronald Reagan's two terms the rate of debt increased beyond the immediate comprehension of those involved - the U.S. became the world's largest debtor nation. George Bush was able to slow the rate of decline, but the debt the government carried in 1992 probably cost him re-election. It is currently mid-May, 1996: the debt of $5 trillion that Bill Clinton attempts to manage will probably be a major issue in the November elections.
America was conceived in debt. By the end of George Washington's presidency the nation was nearly a billion dollars in the red. Still, for the next hundred years, national debt remained a relatively small percentage of the gross national product (GNP).
In the first half of this century, the combination of two world wars, a global depression and the military needs of the Cold War pushed up national debt dramatically. Surprisingly, though, until recently the federal debt itself was still relatively manageable in terms of dollars. The debt-ridden U.S.A. emerged as the strongest standing victor of the Second World War, despite owing more than its entire GNP.
This is the curious aspect of the federal debt's history. During America's strongest period of economic resurgence, the post-War "boom" years, federal debt overwhelmed GNP. Oddly, federal debt as a percentage of GNP was at its most recent low in the first year of Reagan's presidency - preceding a nosedive into recession for the next three years. Since then federal debt as a percentage of GNP has been steadily rising. It now hovers in the upper 50th percentiles.
The contradictory history of debt-to-gross national product ratios and its effect on the U.S. economy has spurred controversy. L
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