Reference no: EM132482017

Our country is in debt. As a nation we currently owe our creditors (the people who loaned us money) $19.8 trillion which works out to near $61,000 per person. While this is a staggerly large number, whether we borrowed money to pay for a war or investment in our infrastructure, the United States has always paid back every dollar of every loan it has taken.

The battle over our national debt dates back to the founding fathers. Alexander Hamilton and Thomas Jefferson fiercely debated and fought over how to pay back the debt the colonies incurred fighting the British in the Revolutionary war. Hamilton believed that the Federal government should assume the debt that each state had from the war because once the world saw our new federal government make these payments they would feel more comfortable doing business with our country in the future. Jefferson was concerned that if each state owed the federal government money, it would only serve to increase the power of a central authority. These are political fights that we still fight about more than 200 years later.

This week I want you to listen to the following Planet Money episode that shares the history of the United States debt, what a deficit is, how the debt ceiling works, and when the national debt began "to explode". Then answer the following questions.

• Which president paid off the national debt and how did his administration manage to pay it down?
• Why did congress decide to institute a debt ceiling?
• Why does the debt ceiling fail to regulate government spending?
• Given what you've learned, do you side more with Jefferson or Hamilton about having a national debt?