Tuesday, December 6, 2011

Until 1980 the national debt was mostly a result of what?

Looking at and interpreting a graph from
Macroeconomics by McEachern, I would argue that most of the federal
debt in 1980 came as a result of defense spending.


Defense
spending made up around 50% of all federal outlays in 1960.  This declined, especially
after the end of the Vietnam War, but it was still around 25% of all outlays in 1980. 
For the whole period 1960 to 1980, defense spending is the single biggest category of
outlay.  Moreover, defense spending was surely a bigger portion of federal spending
during WWII and the Korean War--especially since there were fewer social programs during
those days.


So, looking at that graph, I think that the
best answer is that defense spending was the cause of most of the debt before
1980.

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