The national debt, the cumulative result of two centuries of deficit spending by the federal government, went over $1,000,000,000,000 yesterday.
The Treasury Department said a series of routine financial transactions during the day pushed the debt total beyond the symbolic trillion-dollar barrier. The debt figure had topped $999.3 billion last Friday and then held steady for the next four business days as the Treasury's redemption of old securities nearly matched its issuance of new ones.
Yesterday, the government borrowed slightly more than $9 billion through new 13-week and 26-week Treasury bills, but retired only $8.1 billion of old securities.
The 13-digit debt is an inevitable result of tax and spending decisions made by Congress months or years ago. In the past few weeks, as the debt total approached the new benchmark, political figures from President Reagan on down have invoked the trillion-dollar liability as a symbol of government spending run amok.
"One trillion dollars of debt," the president said in his televised address last month. "If we as a nation needed a warning, let that be it."
The government's debt, though, is nothing new. "A national debt, if not excessive, will be to us a national blessing," declared Alexander Hamilton, the first secretary of the treasury.
And the federal government has had this blessing since 1789, when the new national government assumed liability for the $75 million in debts run up during the Revolutionary War.
By 1835, the government had reduced its debt to the lowest level ever--$37,513. Then budget deficits, due largely to military spending, sent the debt back up, and the total reached $1 billion midway through the Civil War. It took another 110 years, until 1974, for the figure to reach $500 billion.
In other words, half of the current trillion-dollar debt was incurred in the last seven years.
By some measures, however, the national debt has been of decreasing importance in national economic accounts. During World War II, the debt was greater than the nation's total economic output--the gross national product. Today the debt total is only a third as large as the GNP.
The federal government's debt has grown at a rate of of about 5.5 percent each year since 1960, but state and local government debt has increased even more, and private borrowing has grown almost twice as fast as Washington's has.
The debt grows when the government spends more than it raises in taxes and borrows money to make up the deficit. When the government runs a surplus, it can use the extra money to pay off some outstanding debts, but this has happened only once in the past 20 fiscal years.
The Treasury borrows the money by issuing securities--bills (with a maturity of up to one year), notes (one to 10 years' maturity) and bonds (10 to 40 years)--to individuals, banks, corporations, other governments and federal agencies. The biggest share of the debt, about $200 billion, belongs to huge federal trust funds like Social Security and the Civil Service retirement fund.
Because U.S. government securities are a famously safe investment--Uncle Sam has never missed a payment--and because of the accumulation of U.S. dollars overseas, foreign investors have become major lenders in the past decade. Today foreign governments and central banks hold about 14.5 percent of the debt.
Among other things, that means that U.S. taxpayers will send about $15 billion in interest payments this year to foreign governments, mainly wealthy oil-producing nations.
As the nation's most trusted borrower, the government can generally borrow at lower interest rates than private concerns. But it, too, has suffered from the recent steep climb in interest rates. In the 1960s, the interest on 91-day Treasury bills averaged 4 percent; in the 1970's, 6.3 percent. Ninety-one day bills issued yesterday averaged an interest rate of 14.29 percent.
In fiscal 1982, for the first time, the government will pay more than $100 billion in interest on its debt. Interest payments now constitute the third largest item in the federal budget, behind benefit payments (such as Social Security) and national defense.
For the future, the debt total seems certain to move steadily upward. Even if the government performs as austerely as Ronald Reagan hopes, it will continue running deficits at least through fiscal 1984. And the Office of Management and Budget warns, "Balancing the budget is not enough to prevent an increase in the federal debt" because government expenses not counted in the budget will continue to go up.
If the debt keeps increasing at about the current rate, it will hit $2 trillion before the end of the 1980s.