Most economists agree that the current pace of U.S. spending is unsustainable in the long run, but how did it get this bad?
How did the U.S. manage to spend its way out of a surplus and into massive debt in roughly a decade, putting itself 17 trillion U.S. dollars in the hole? Moreover, as nations worldwide eye Washington's debt nervously, how will the world's largest economy pay it off?
The issue grabbed headlines earlier this month after a tense standoff between Democrats and Republicans that brought the nation to the edge of a debt default. After the dust cleared, U.S. Congress voted to raise the debt limit, enacting no significant budget cuts, once again putting off dealing with the problem until a later date.
A little longer than a decade ago, no one imagined the United States would find itself here. During the tech-led economic boom of the 1990s, federal revenues exceeded spending for the first time in decades, creating a surplus. And in April 2001, the federal budget hit a peak surplus of 2.61 percent of the GDP, according to Wells Fargo, a U.S. bank and financial services holding company.
Jobs were plentiful and unemployment was low. Young college grads jumpstarted their careers amid a booming economy, and the tech sector fueled a surging stock market. The future seemed bright.
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