Breaking the Barrier

For anyone but a mathematician, it is a number beyond meaning, whether characterized as a thousand billion, a million million, or written out as a one followed by a dozen zeros. The number is a trillion, and last week Ronald Reagan signed a bill increasing the legal debt limit of the U.S. Government for the first time to more than $1 trillion.

Washington has run deficits in 42 of the past 50 years and has been forced to borrow heavily to bridge the gap between income and outlay. The Government does this by issuing bonds, notes and bills, which are promises to pay money back to investors willing to lend it. In the main, Washington owes the $1 trillion to Americans. Only 14% of the public debt is held by foreigners.

While the national debt grew from $48.9 billion in 1941 to $370.9 billion in 1970 and on up to nearly $1 trillion in just the past decade, it now represents a much smaller percentage of the gross national product than at many other times. In 1946, after the heavy borrowing to pay for World War II, the national debt stood at $269.4 billion, or about 115% of the G.N.P. By 1964, the debt was down to 51% of G.N.P., and it is now just 35%.

Economists and financiers worry about the size of the national debt primarily because interest charges on it have become a major budget expenditure. The Government this year will pay a staggering $94.5 billion in interest on the debt, the third largest item in the federal budget after defense and Social Security.

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