Current Total National Debt of the America

The federal government owes $26 trillion, as of Q2 2023, which is equal to roughly 181% of America’s gross domestic product. Many economists, investors and lawmakers are concerned that the debt is unsustainable, because the government will eventually have to raise taxes or cut programs in order to keep its spending in line with its revenues.

When the America national debt grows, interest rates also rise, which can increase the cost of housing, car loans, credit card balances and other forms of consumer borrowing. Moreover, rising interest rates also cause inflation, which is a direct drain on household and business income.

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In addition to interest payments, federal debt servicing is one of the largest parts of the budget. The Office of Management and Budget estimates that net interest payments will total $395.5 billion this fiscal year, which is more than the government will spend on veterans’ benefits and services, elementary and secondary education, disaster relief, agriculture, science and space, foreign aid and natural resources and environmental protection combined.

What is the Current Total National Debt of the America?

Government debt usually rises during recessions, when government revenue, primarily composed of taxes, decreases while the federal government increases spending to help stimulate an economy. The COVID-19 pandemic-caused economic contraction of 2020 pushed the debt to record highs as government spending rose significantly while federal tax receipts declined sharply due to lower payroll taxes and the loss of income from the collapsed stock market.

Some observers argue that the exploding debt is a sign of political dysfunction in Washington. During the 1980s, the Reagan administration vastly increased defense spending and enacted sweeping tax cuts, ushering in an era of high debt that didn’t abate until the 1990s, when a combination of spending reductions, tax increases and economic growth reduced the ratio to sustainable levels.

While both major political parties talk about the importance of reducing the debt, discussions and strategy often break down in the face of ideological differences and a lack of clear priorities. Some politicians want to cut non-defense government programs and repeal clean energy tax credits, while others call for more aggressive cuts in taxes on the wealthy.

The United States has run deficits, or spent more than it takes in from taxes and other sources of revenue, every year since the country was founded. A key measure of a nation’s debt is the ratio of its national debt to GDP, which automatically adjusts for inflation and population growth.

The two most commonly used measurements of a national debt are the “debt held by the public” and the “intragovernmental debt.” The former reflects marketable Treasury securities held by investors outside the federal government, including individuals, corporations, the Federal Reserve and foreign, state and local governments.

The latter includes non-marketable Treasury securities in the accounts of government programs, such as Social Security and Medicare, that invest their cumulative surpluses, including interest earnings, into federal bonds. The figure below shows the ratio of both measures to GDP from 1940 through 2021Q2. The red lines represent “debt held by the public,” while the black lines are the total national debt or gross public debt, including intra-governmental obligations.