Although the US has seen many Shutdowns in the earlier years, the Shutdown in the year 2013 was a different one. Around 8 lakh government employees were retrenched from their jobs due to a tiff between the President and the members of the opposition party. Almost 13 lakh employees were asked to work without pay. US which otherwise would spend millions of dollars for the war, had no money to pay its employees. This was a shocking revelation for many citizens of this world.
People who know a little bit think that the shutdown was a result of a tiff between people due to their divergent political views. However, the root cause of this shutdown was nothing but the financial difficulties that US faced. This problem has been attached to this country right from the beginning like an umbilical cord. This problem is nothing but the national debt. The richest and powerful country of the world is deeply entrenched in debt and due to this shutdown the US, finds it hard to stay above water.
Going by the international reports, the size of global financial affairs is in excess of USD 71.83 Trillion means greater than USD 71 lakh crores and the expanse of US’s financial affairs is a massive USD 16.6 Trillion. If one has to measure it as a percentage, it is almost 23% of the world financial affairs. It would be interesting to note that US’s population is merely 31 Crores as compared to the world population of 7.9 Billion, the per capita income of an average American is almost USD 40000 per year. Foreign investment of US is in excess of USD 4.5 Trillion. The total expense of US per year is about USD 3.454 Trillion.
In spite of all this, the total debts of US are USD 17 Trillion. Needless to say, it would be around 17 Lakh Crores! This has historical significance because this process has begun right from its foundation.
From the time the federal law began in the year 1789, in just about 2 years, US had accumulated a debt of about USD 7.5 Crores in the year 1791. Surprising thing is that in the year 1835, the then financial ministry had repaid the entire debt. But with the start of the year 1836, the debt began to rise again. In the year 1863, during the civil war, the debt had risen to USD 1 Billion. After that, the grip of this debt was never lost on US ever.
During the First and the Second World War, the clutches of this debt kept tightening over US. During the Second World War, the debt equalled the national GDP rate. At the end of Second World War, US had its debt amounting to USD 251 Billion. This figure was 112% of the GDP. After that till 1980, this percentage decreased to about 26%. However during the presidential tenure of Ronald Reagan and George Bush Sr., the debt kept on increasing at an alarming rate. Except during the tenure of Bill Clinton as the President, the clutches of this debt kept tightening the noose around America.
At the onset of 21st century, the debt had reached a milestone of USD 1 Trillion. Within a span of 13 years, the debt kept compounding. By the year 2013, the Debt had risen to record breaking USD 17 Trillion. Around the same time, the wind of recession had begun to flow. The recession was due to scam of “Sub-Prime Lending” which was coupled with Home loans. The roots of this problem lied in the loans that were availed by US citizens and the vast amount of loans which were granted to them. A report which was conducted in the year 2007, reported that American citizens had taken 127% of their family’s earnings as loans.
In short, US families were mounting their loans just like their own government. In order to pull out its citizens and lending companies from the clutches of these loans, US government was pouring money into the financial system. This money was also obtained by way of additional debts. The “Shutdown” of 2013 began somewhere there.
(Source: Pratyaksha Anniversary Special Issue 2013)
To be continued…