"Blessed are the young for they shall inherit the national debt."
-- Herbert Hoover
A recent topic for political debate, and one that is usually included in most political rhetoric, is the national debt, and the debt ceiling crisis. I believe that there are many misconceptions about this issue, and that politicians use and promote these misconceptions for the purpose of making political arguments. The example of this that sticks out for me is a commercial I saw on television that seems to depict a future where the US has presumably been taken over by China. That commercial seemed a little extreme, so for this paper, I seek to correct these sorts of misconceptions, or to at least show that some arguments about the national debt are a little wrong.
Probably the most important misconception about the national debt is the misconception that China owns most of the national debt, and that such a situation makes the United States government a puppet to China. The latter misconception doesn't take much research to see as an exaggeration of the truth. Unlike personal debt, national debt isn't enforced by some higher power. Money owed to China is a deal between the borrower and China, and there aren't any higher powers to force the collection of debts. If China wanted to collect on that debt, the worst they could do is to go to war, and that's rather unrealistic. The main problem with this idea that China owns our government, is the fact that China's share of the national debt isn't as big as people seem to think. For this paper, I took a survey from 12 people. I asked them each, "How much of the national debt do you think is owned by China?" Of those people, 3 thought China owned more than 60 percent of the national debt, 4 thought china owned between 40 and 60 percent, 2 thought China owned between 15 and 40 percent, and 3 thought China owned less than 15%. These numbers are on a broad range, but average far from the correct answer, so there is clearly a misconception about the actual proportion of our debt that is owned by China. In reality, China only owns about 8-10% of the national debt (depending on when the measure was taken). This is far from being a majority of our debt, and China doesn't even own more of our debt than anybody else. The largest share of the national debt is owned by individuals and institutions within the United States.
The idea that China owns the United States government is a pretty big misconception, but another subject relating to the national debt that people don't seem to fully understand the issue of the debt ceiling. The debt ceiling is a limit set by legislation on how much the government can borrow. Recently, as has been the problem many times before, the national debt has reached that limit. The misconception here is mostly that the debt ceiling is some fundamental limit that we shouldn't reach. In...