The national debt of the United States is the total national debt owed by the federal government of the United States to Treasury security holders. The national debt at any point in time is the face value of the then-outstanding Treasury securities that have been issued by the Treasury and other federal agencies. The terms "national deficit" and "national surplus" usually refer to the federal government budget balance from year to year, not the cumulative amount of debt. In a deficit year the national debt increases as the government needs to borrow funds to finance the deficit, while in a surplus year the debt decreases as more money is received than spent, enabling the government to reduce the debt by buying back some Treasury securities. In general, government debt increases as a result of government spending and decreases from tax or other receipts, both of which fluctuate during the course of a fiscal year.[1] There are two components of gross national debt:[2]
Historically, the U.S. public debt as a share of gross domestic product (GDP) increases during wars and recessions and then subsequently declines. The ratio of debt to GDP may decrease as a result of a government surplus or via growth of GDP and inflation. The Congressional Budget Office (CBO) estimated in February 2024 that Federal debt held by the public is projected to rise from 99 percent of GDP in 2024 to 116 percent in 2034, and would continue to grow if current laws generally remained unchanged. Over that period, the growth of interest costs and mandatory spending outpaces the growth of revenues and the economy, driving up debt. Those factors persist beyond 2034, pushing federal debt higher still, to 172 percent of GDP in 2054.[3] In recent decades, aging demographics and rising healthcare costs have led to concern about the long-term sustainability of the federal government's fiscal policies.[4] The aggregate, gross amount that Treasury can borrow is limited by the United States debt ceiling.[5]
Total US federal government debt breached $30 trillion mark for the first time in history in February 2022.[6] As of December 2023, total federal debt was $33.1 trillion; $26.5 trillion held by the public and $12.1 trillion in intragovernmental debt.[7] In February 2024, the total federal government debt grew to $34.4 trillion after having grown by approximately $1 trillion in both of two separate 100-day periods since the previous June.[8] The annualized cost of servicing this debt was $726 billion in July 2023, which accounted for 14% of the total federal spending.[9] In December 2021, debt held by the public was estimated at 96.19% of GDP, and approximately 33% of this public debt was owned by foreigners (government and private).[10] The United States has the largest external debt in the world. The total number of U.S. Treasury securities held by foreign entities in December 2021 was $7.7 trillion, up from $7.1 trillion in December 2020.[11]
The budget deficit in fiscal 2018 (which runs from October 1, 2017, to September 30, 2018, the first year budgeted by President Trump) is forecast to be $804 billion, an increase of $139 billion (21%) from the $665 billion in 2017 and up $242 billion (39%) over the previous forecast (June 2017) of $580 billion for 2018. The June 2017 forecast was essentially the budget trajectory inherited from President Obama; it was prepared prior to the Tax Act and spending increases under President Trump.
baseline
For the 2018–2027 period, CBO projects the sum of the annual deficits (i.e., debt increase) to be $11.7 trillion, an increase of $1.6 trillion (16%) over the previous baseline (June 2017) forecast of $10.1 trillion.
The $1.6 trillion debt increase includes three main elements:
$1.7 trillion less in revenues due to the tax cuts;
$1.0 trillion more in spending; and
Partially offsetting incremental revenue of $1.1 trillion due to higher economic growth than previously forecast.
Debt held by the public is expected (Congressional Budget Office Outlook) to rise from 78% of GDP ($16 trillion) at the end of 2018 to 96% GDP ($29 trillion) by 2028. That would be the highest level since the end of World War II.
CBO estimated under an alternative scenario (in which policies in place as of April 2018 are maintained beyond scheduled initiation or expiration) that deficits would be considerably higher, rising by $13.7 trillion over the 2018–2027 period, an increase of $3.6 trillion over the June 2017 baseline forecast. Maintaining current policies for example would include extending the individual Trump tax cuts past their scheduled expiration in 2025, among other changes.
The debt increase of $1.6 trillion represents approximately $12,700 per household (assuming 126.2 million households in 2017), while the $3.6 trillion represents $28,500 per household.
Since 2010, the U.S. Treasury has been obtaining negative real interest rates on government debt, meaning the inflation rate is greater than the interest rate paid on the debt.[50] Such low rates, outpaced by the inflation rate, occur when the market believes that there are no alternatives with sufficiently low risk, or when popular institutional investments such as insurance companies, pensions, or bond, money market, and balanced mutual funds are required or choose to invest sufficiently large sums in Treasury securities to hedge against risk.[51][52] Economist Lawrence Summers states that at such low interest rates, government borrowing actually saves taxpayer money and improves creditworthiness.[53]
In the late 1940s through the early 1970s, the U.S. and UK both reduced their debt burden by about 30% to 40% of GDP per decade by taking advantage of negative real interest rates, but there is no guarantee that government debt rates will continue to stay this low.[51][54] Between 1946 and 1974, the U.S. debt-to-GDP ratio fell from 121% to 32% even though there were surpluses in only eight of those years which were much smaller than the deficits.[55]
Raising reserve requirements and full reserve banking[edit]
A growing portion of savings would go towards purchases of government debt, rather than investments in productive capital goods such as factories and computers, leading to lower output and incomes than would otherwise occur;
If higher marginal tax rates were used to pay rising interest costs, savings would be reduced and work would be discouraged;
Rising interest costs would force reductions in government programs;
Restrictions to the ability of policymakers to use fiscal policy to respond to economic challenges; and
An increased risk of a sudden fiscal crisis, in which investors demand higher interest rates.
[61]
A $988 billion increase in mandatory outlays;
A $446 billion decrease in revenues; and
A $326 billion increase in discretionary outlays, stemming from emergency supplemental appropriations.
The COVID-19 pandemic in the United States impacted the economy significantly beginning in March 2020, as businesses were shut-down and furloughed or fired personnel. About 16 million persons filed for unemployment insurance in the three weeks ending April 9. It caused the number of unemployed persons to increase significantly, which is expected to reduce tax revenues while increasing automatic stabilizer spending for unemployment insurance and nutritional support. As a result of the adverse economic impact, both state and federal budget deficits will dramatically increase, even before considering any new legislation.[114]
To help address lost income for millions of workers and assist businesses, Congress and President Trump enacted the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) on March 27, 2020. It included loans and grants for businesses, along with direct payments to individuals and additional funding for unemployment insurance. The act carried an estimated $2.3 trillion price tag, with an expectation that some or all of the loans would ultimately be paid back including interest. While the law would have almost certainly increased budget deficits relative to the January 2020 10-year CBO baseline (completed prior to the COVID-19 pandemic), in the absence of the legislation, a complete economic collapse could have occurred.[115] However, as of 2023, many of these loans have been forgiven.[116]
CBO provided a preliminary score for the CARES Act on April 16, 2020, estimating that it would increase federal deficits by about $1.8 trillion over the 2020-2030 period. The estimate includes:
CBO reported that not all parts of the bill will increase deficits: “Although the act provides financial assistance totaling more than $2 trillion, the projected cost is less than that because some of that assistance is in the form of loan guarantees, which are not estimated to have a net effect on the budget. In particular, the act authorizes the Secretary of the Treasury to provide up to $454 billion to fund emergency lending facilities established by the Board of Governors of the Federal Reserve System. Because the income and costs stemming from that lending are expected to roughly offset each other, CBO estimates no deficit effect from that provision.”[117]
The Committee for a Responsible Federal Budget estimated that the budget deficit for fiscal year 2020 would increase to a record $3.8 trillion (~$4.41 trillion in 2023), or 18.7% GDP.[118] For scale, in 2009 the budget deficit reached 9.8% GDP ($1.4 trillion nominal dollars) in the depths of the Great Recession. CBO forecast in January 2020 that the budget deficit in FY2020 would be $1.0 trillion (~$1.16 trillion in 2023), prior to considering the impact of the COVID-19 pandemic or CARES.[119] CFRB further estimated that the national debt would reach 106% of U.S. GDP in September 2020, a record since the aftermath of World War II.[120]
President Biden also allocated significant amounts of money towards relief of the COVID-19 pandemic. According to a May 2021 report, Biden has or plans to spend $5.72 (~$6.35 trillion in 2023) trillion dollars toward this effort and others such as climate change including providing stimulus checks and serving schools and low-income children.[121] Many economists have agreed that this unprecedented level of spending from the Biden Administration has, in part, contributed to the inflation surge from 2021 to 2023 as a result of increasing the money supply in the economy.[122][123]
U.S. as of 31 July 2014 total 261.5 million troy ounces with a book value of approximately $11.04 billion.[150]
United States balance of trade (from 1960), with negative numbers denoting a trade deficit
Foreign exchange reserves
The national debt was up to $80,885 per person as of 2020.
[152]
The national debt equated to $59,143 per person U.S. population, or $159,759 per member of the U.S. working taxpayers, back in March 2016.
[153]
In 2008, $242 billion was spent on payments servicing the debt, out of a total tax revenue of $2.5 trillion, or 9.6%. Including non-cash interest accrued primarily for Social Security, interest was $454 billion or 18% of tax revenue.[136]
interest
Total U.S. , including mortgage loan and consumer debt, was $11.4 trillion in 2005. By comparison, total U.S. household assets, including real estate, equipment, and financial instruments such as mutual funds, was $62.5 trillion in 2005.[154]
household debt
Total U.S. Consumer Credit Card was $931.0 billion in April 2009.[155]
revolving credit
The U.S. deficit in goods and services was $725.8 billion in 2005.[156]
balance of trade
According to the U.S. Department of Treasury Preliminary 2014 Annual Report on U.S. Holdings of Foreign Securities, the United States valued its foreign treasury securities portfolio at $2.7 trillion. The largest debtors are Canada, the United Kingdom, Cayman Islands, and Australia, whom account for $1.2 trillion of owed to residents of the U.S.[157]
sovereign debt
The entire public debt in 1998 was equal to the cost of research, development, and deployment of and nuclear weapons-related programs during the Cold War.[158][159][160]
U.S. nuclear weapons
United States federal government credit-rating downgrades
