It's gone over-budget in 44 of the last 50 years. So, why is Washington suddenly so concerned about the national debt? Because soon, everyone could pay the price. CBS Evening News anchor Katie Couric has tonight's "In Focus" with a team of CBS News correspondents on Deficit and the Debt.
Inside the Machine
The Treasury Auction room is the control center for government borrowing. CBS News Senior Business Correspondent Anthony Mason has been one of a few outsiders ever allowed inside.
"That room is essentially the American credit card machine. It's basically selling treasury bills, basically IOUs that we use to pay off the money that we are borrowing," Mason says. "I found that room kind of spooky. If we can't issue those IOU's - which keeps the government running on a day-to-day basis - then we can't run the country anymore. We don't have the money."
In the 1983 State of the Union speech, President Ronald Reagan said, "the deficit problem is a clear and present danger to the basic health of our republic." At that point the deficit was $207 billion. The national debt was $1.4 trillion.
Budget Deficit Disorder
"Russel Long, who used to be the Chairman of the Finance Committee in the Senate, used to say that everybody's view of taxes was: "Don't tax him, don't tax me, tax that fellow behind the tree," recalls CBS News Chief Washington Correspondent Bob Schieffer.
The government will collect $2.3 trillion in taxes this year. That's well short of the $3.6 trillion it will spend. Fifty-five percent of that spending will go to mandatory expenses like social security, Medicare and Medicaid; 43 percent is called discretionary spending. That's money Congress controls and allocates to more than two dozen government departments. Two percent of the budget goes to Congressional pet-projects or earmarks.
"Everybody wants to cut the budget," Schieffer says. "They just don't want to cut the budget that affects their constituents."
Over the last 40 years, the U.S. has stayed out of the red just four times. This year's budget deficit will be the biggest ever: $1.5 trillion. Digging ourselves out requires tough choices.
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CBS News Congressional correspondent Nancy Cordes says, "It's practically a political non-starter to cut popular programs like Social Security or Medicare because you know when you are up for re-election, your opponent is going to tout your vote. So while members of Congress do feel they need to make these tough choices - they are reluctant to do it because they know their political future could be on the line."
"This government is too big and spends too much," President Bush said at the 1992 State of the Union address. At that time the deficit was $290 billion. The national debt was $4 trillion.
In the 1995 State of the Union address, President Clinton said, "Should we cut the deficit more? Well, of course we should. Of course we should." The deficit was $164 billion then, with the national debt at $4.9 trillion.
Kindness of Strangers
"U.S. debt has always been perceived as the least risky type of debt because the United States doesn't default," says CBS News business correspondent Rebecca Jarvis.
The U.S. counts on citizens and financial institutions to give it loans. In return, the treasury pays interest as high as 4 percent on these bonds and treasury bills. Most of the IOUs are held by American investors and the U.S. government. But one-third is owned by foreign lenders like Great Britain, Japan and China (the treasury owes that country $880 billion).
CBS News Beijing correspondent Celia Hatton says, "The No. 1 option out there, the safest place for it to place its nest egg is in U.S. debt."
But that confidence may be eroding. Years of running annual deficits is driving the total national debt to a whopping $14 trillion.
"A day won't go by where I don't get an email from a trader or a hedge fund manager who says the chickens are coming home to roost," Jarvis says. "What they mean by that is that every day we assume more and more debt as a country, it makes us less likely to pay out that debt in the future."
"Even two years ago we were hearing from the head of the Kuwaiti Investment Authority that he was worried about the direction the U.S. was headed in," Mason says.
"This is real problem. And if this continues forever, then there is a real issue in the U.S. economy," Baader al Sa'ad told Mason in 2008. "Somebody has to fund this deficit."
"Together we can restrain the spending appetite of the federal government, and we can balance the federal budget," President George W. Bush said in his 2007 State of the Union Address. The deficit was $160 billion at that point, with the national debt running at $8.9 trillion.
"We will work within a budget to invest in what we need and sacrifice what we don't," President Obama said in his 2010 State of the Union Address. The deficit is now $1.5 trillion, and the national debt is $13.8 trillion.
"What investors on Wall Street are most concerned with is not necessarily that the deficit is too big now - but there is no plan to address it in the future," says Jill Schlesinger, editor at large at Moneywatch.com.
The more Uncle Sam pays, the more Americans pay. Interest rates for business loans and mortgages follow the rates government pays its lenders. In the early 1980s, the government had to pay 15 percent to lenders - which pushed 30-year mortgage rates above 18 percent.
Mason says, "We are able to keep servicing this debt because the interest rates are low. The question is what's the breaking point? And we don't want to get even close to that."
"The problem with talking about the debt is that it gets into esoteric monetary policy blah, blah, blah," Schlesinger says. "The reality is, 'why do we care about the national debt?' We care because it affects our lives everyday."
Explosive economic growth and the tax revenue it generates could help close the budget gap. But that's simply not on the horizon.
"You have to start thinking about cutting programs," Schieffer says. "It's going to take an overall refocusing at what we want from government and what we expect from government."
More Debt Reporting from Moneywatch.com and Bnet.com
Just How Big is U.S. Debt? 18 Scary Facts
4 Critical Reasons Why You Should Care About the Budget Deficit
Deficit Reduction Proposals: What They Could Mean for You
Do Republicans Want to Cut the Deficit? Rep. Paul Ryan Does
Is Your Mortgage Interest Deduction Doomed?
Robert Reich: Create Demand First, Cut the Deficit Next