What is the public debt of the U.S.?
Deficit reduction in the United States
Public debt owned by foreigners has increased to approximately 50% of the total or approximately $3.4 trillion. As a result, nearly 50% of the interest payments are now leaving the country, which is different from past years when interest was paid to U.S. citizens holding the public debt. Interest expenses are projected to grow dramatically as the U.S. debt increases and interest rates rise from very low levels in 2009 to more typical historical levels. CBO estimates that nearly half of the debt increases over the 2009–2019 period will be due to interest.
History of the United States public debt
According to the Congressional Budget Office, the United States last had a budget surplus during fiscal year 2001. From fiscal years 2001 to 2009, spending increased by 6.5% of gross domestic product (from 18.2% to 24.7%) while taxes declined by 4.7% of GDP (from 19.5% to 14.8%). Spending increases (expressed as percentage of GDP) were in the following areas: Medicare and Medicaid (1.7%), defense (1.6%), income security such as unemployment benefits and food stamps (1.4%), Social Security (0.6%) and all other categories (1.2%). Revenue reductions were individual income taxes (−3.3%), payroll taxes (−0.5%), corporate income taxes (−0.5%) and other (−0.4%).
Financial position of the United States
In 1946, US households and non-profits owed $35 billion of debt or 15.8% of GDP. By 2009 this figure had risen to $13.6 trillion or 95.4% of GDP. Home mortgage debt in 1946 represented 66.5% of household debt; consumer credit represented another 24%. By 2009, home mortgage debt had risen to 76% of household debt and consumer credit had fallen to 18.22%. According to the McKinsey Global Institute, the 2008 financial crisis was caused by "unsustainable levels of household debt." The ratio of debt to household income rose by about one-third from 2000 to 2007. The US currently has the twelfth highest debt to GDP ratio among advanced economies.
List of countries by public debt
This is a list of countries by public debt to GDP ratio as listed by CIA's World Factbook and IMF. Net debt figure is the cumulative total of all government borrowings less repayments that are denominated in a country's home currency.
National debt of the United States
Public debt rose sharply during the 1980s, as Ronald Reagan cut tax rates and increased military spending. It fell during the 1990s, due to decreased military spending, increased taxes and the 1990s boom. Public debt rose sharply during George W Bush's presidency and in the wake of the 2007–2008 financial crisis, with resulting significant tax revenue declines and spending increases.
Government debt
Public debt is the total of all borrowing of a government, minus repayments denominated in a country's home currency. CIA's World Factbook lists only the percentages of GDP; the total debt and per capita amounts have been calculated in the table below using the GDP (PPP) and population figures of the same report.
Economy of the United States
The U.S. economy experienced a serious economic downturn during the Great Recession which technically lasted from December 2007 – June 2009. However, real GDP regained its pre-crisis (late 2007) peak by 2011, household net worth by Q2 2012, non-farm payroll jobs by May 2014, and the unemployment rate by September 2015. Each of these variables continued into post-recession record territory following those dates, with the U.S. recovery becoming the second-longest on record in April 2018. Debt held by the public, a measure of national debt, was approximately 77% of GDP in 2017, ranked the 43rd highest out of 207 countries. Income inequality ranked 41st highest among 156 countries in 2017, and ranks among the highest in income inequality compared to other Western nations.
Subprime mortgage crisis
The U.S. government continued to run large deficits post-crisis, with the national debt rising from $10.0 trillion as of September 2008 to $16.1 trillion by September 2012. The debt increases were $1.89 trillion in fiscal year 2009, $1.65 trillion in 2010, $1.23 trillion in 2011, and $1.26 trillion in 2012.
Bond market
Note that the total federal government debts recognized by SIFMA are significantly less than the total bills, notes and bonds issued by the U.S. Treasury Department, of some $19.8 trillion at the time. This figure is likely to have excluded the inter-governmental debts such as those held by the Federal Reserve and the Social Security Trust Fund.
National debt of the United States
As of October 2018, foreigners owned $6.2 trillion of U.S. debt, or approximately 39 percent of the debt held by the public of $16.1 trillion and 28 percent of the total debt of $21.8 trillion. At the close of 2018, the largest foreign holders were China ($1.13 trillion), Japan ($1.02 trillion), Brazil ($313 billion), and Ireland ($287 billion).
United States debt-ceiling crisis of 2011
The national debt rose $238 billion (or about 60% of the new debt ceiling) on August 3, the largest one-day increase in the history of the United States. The US debt surpassed 100 percent of gross domestic product for the first time since World War II. According to the International Monetary Fund, the US joined a group of countries whose public debt exceeds their GDP. The group includes Japan (229 percent), Greece (152 percent), Jamaica (137 percent), Lebanon (134 percent), Italy (120 percent), Ireland (114 percent), and Iceland (103 percent).
The NASDAQ, ASX, and S&P 100 lost up to four percent in value, the largest drop since July 2009, during the global financial crisis that was precipitated in part by the United States housing bubble and the corresponding losses by holders of mortgages and mortgage-backed securities. The commodities market also took losses, with average spot crude oil prices falling below $US86 a barrel. The price of gold fell, as deepening losses on Wall Street prompted investors to sell.
National debt of the United States
A significant number of economists and analysts dismiss any and all concerns over foreign holdings of United States government debt denominated in U.S. dollars, including China's holdings.
National debt of the United States
Because a large variety of people own the notes, bills, and bonds in the "public" portion of the debt, Treasury also publishes information that groups the types of holders by general categories to portray who owns United States debt. In this data set, some of the public portion is moved and combined with the total government portion, because this amount is owned by the Federal Reserve as part of United States monetary policy. (See Federal Reserve System.)
National debt of the United States
The government controls the Public Company Accounting Oversight Board, which would normally criticize inconsistent accounting practices, but it does not oversee its own government's accounting practices or the standards set by the Federal Accounting Standards Advisory Board. The on- or off-balance sheet obligations of those two independent GSEs was just over $5 trillion at the time the conservatorship was put in place, consisting mainly of mortgage payment guarantees and agency bonds. The confusing "independent but government-controlled" status of the GSEs has resulted in investors of the legacy common shares and preferred shares launching various activist campaigns in 2014.
United States debt ceiling
Under the No Budget, No Pay Act of 2013, both houses of Congress voted to suspend the debt ceiling from February 4, 2013 until May 19, 2013. On May 19, the debt ceiling was raised to approximately $16.699 trillion to accommodate the borrowing done during the suspension period.
2013 United States federal government shutdown
Analysts were concerned that the political gridlock would extend into mid-October, when Congress and the President must agree to raise the debt ceiling to avoid the prospect of defaulting on the public debt. Following the debate over the debt ceiling in May 2013, the Treasury Department was forced to engage in extraordinary measures to fund the government. In August 2013, the Treasury informed Congress that the extraordinary measures would be insufficient starting in mid-October and further specified, in late September, that the U.S. would begin to default on its debts if a new debt ceiling was not approved by October 17. On October 2, President Obama explicitly linked the government shutdown to the debt ceiling issue, stating that he would not reopen budget negotiations until Republicans agreed to passage of a bill raising the debt limit. On October 7, the Moody's bond credit rating agency released a memo stating that it was unlikely the U.S. would risk a default on its public debt, and that the nation instead "would continue to pay interest and principal on its debt". The memo further stated that the financial situation was more serious in 2011 than the 2013 problem. However, such prioritizing of debt payments over all other needs would require that the government default on many other payment obligations, likely including a wide array of business contracts, employee salaries, social insurance benefits, and other programs. The Council on Foreign Relations said that among the payments implicated were military wages, Medicare and Social Security payments, and unemployment support.
Political debates about the United States federal budget
One incident illustrates the nature and tensions of the debate. The U.S. added $1.0 trillion to the national debt in fiscal year (FY) 2008, which ended September 2008. The Congressional Budget Office projected two weeks prior to Obama taking office in January 2009 that the deficit in FY2009 would be $1.2 trillion and that the debt increase over the following decade would be $3.1 trillion assuming the expiration of the Bush tax cuts as scheduled in 2010, or around $6.0 trillion if the Bush tax cuts were extended at all income levels. Adjusting other assumptions in the CBO baseline could have raised that debt level even higher. In response to Republican criticism, President Obama claimed that "The fact of the matter is that when we came into office, the deficit was $1.3 trillion [for FY 2009]...[with] $8 trillion worth of debt [projected] over the next decade," a claim which Politifact rated as "Mostly True." President Obama had pledged not to raise taxes except on high income taxpayers, so his debt figure included the extension of the Bush tax cuts for most taxpayers. These facts did not stop Republicans from blaming the President for the ensuing debts during his administration.
Financial position of the United States
In 1946, the federal government owed $251 billion of debt or 102.7% of GDP. By 2009 this figure had risen to $7.8 trillion, but the federal government's debt-to-GDP ratio had fallen to 54.75%.
United States debt ceiling
Another debt ceiling crisis arose in early 2013 when the ceiling was reached again, and Treasury adopted extraordinary measures to avoid a default. The 2013 crisis was resolved, for the time being, on February 4, 2013, President Barack Obama signed the No Budget, No Pay Act of 2013 to, besides other things, suspend the debt ceiling until May 19, 2013. After May 19, the debt ceiling was raised to $16.699 trillion, the level of debt incurred during the suspension, and Treasury resumed extraordinary measures. Treasury Secretary Jack Lew notified Congress that these measures would be exhausted by October 17, 2013. On October 7, 2013 Treasury indicated that the debt ceiling and extraordinary measures will be exhausted and that a default will occur on October 17 when interest payments are due.
United States debt-ceiling crisis of 2011
Prior to the debt ceiling crisis of 2011, the debt ceiling was last raised on February 12, 2010 to $14.294 trillion.
Current account
Since 1989, the current account deficit of the US has been increasingly large, reaching close to 7% of the GDP in 2006. In 2011, it was the highest deficit in the world. New evidence, however, suggests that the US current account deficits are being mitigated by positive valuation effects. That is, the US assets overseas are gaining in value relative to the domestic assets held by foreign investors. The net foreign assets of the US are therefore not deteriorating one to one with the current account deficits. The most recent experience has reversed this positive valuation effect, however, with the US net foreign asset position deteriorating by more than two trillion dollars in 2008, down to less than $18 trillion, but has since risen to $25 trillion. This temporary decline was due primarily to the relative under-performance of domestic ownership of foreign assets (largely foreign equities) compared to foreign ownership of domestic assets (largely US treasuries and bonds).
United States debt-ceiling crisis of 2011
Underlying the contentious debate over raising the debt ceiling has been an anxiety, growing since 2008, about the large United States federal budget deficits and the increasing federal debt. According to the Congressional Budget Office (CBO): "At the end of 2008, that debt equaled 40 percent of the nation's annual economic output (a little above the 40-year average of 37 percent). Since then, the figure has shot upward: By the end of fiscal year 2011, the Congressional Budget Office (CBO) projects federal debt will reach roughly 70 percent of gross domestic product (GDP) — the highest percentage since shortly after World War II." The sharp rise in debt after 2008 stems largely from lower tax revenues and higher federal spending related to the severe recession and persistently high unemployment in 2008–11. Though a balanced budget is ideal, allowing down payment on debt and more flexibility within government budgeting, limiting deficits to within 1% to 2% of GDP is sufficient to stabilize the debt. Deficits in 2009 and 2010 were 10.0 percent and 8.9 percent respectively, and the largest as a share of gross domestic product since 1945.
Financial position of the United States
The Federal Reserve issues routine reports on the flows and levels of debt in the United States. As of the first quarter of 2010, the Federal Reserve estimated that total public and private debt owed by American households, businesses, and government totaled $50 trillion, or roughly $175,000 per American and 3.5 times GDP.
Financial position of the United States
The U.S. increased the ratio of public and private debt from 152% GDP in 1980 to peak at 296% GDP in 2008, before falling to 279% GDP by Q2 2011. The 2009-2011 decline was due to foreclosures and increased rates of household saving. There were significant declines in debt to GDP in each sector except the government, which ran large deficits to offset deleveraging or debt reduction in other sectors.
United States Note
, the U.S. Treasury calculates that $239 million in United States notes are in circulation and, in accordance with debt ceiling legislation, excludes this amount from the statutory debt limit of the United States. The $239 million excludes $25 million in United States Notes issued prior to July 1, 1929, determined pursuant to Act of June 30, 1961, 31 U.S.C. 5119, to have been destroyed or irretrievably lost.
Household debt
Household debt is defined as the combined debt of all people in a household. It includes consumer debt and mortgage loans. A significant rise in the level of this debt coincides historically with many severe economic crises and was a cause of the U.S. and subsequent European economic crises of 2007–2012. Several economists have argued that lowering this debt is essential to economic recovery in the U.S. and selected Eurozone countries.
Student loan default in the United States
"The Economist" reported in June 2014 that U.S. student loan debt exceeded $1.2 trillion, with over 8 million debtors in default. Public universities increased their fees by a total of 27% over the five years ending in 2012, or 20% adjusted for inflation. Public university students paid an average of almost $8,400 annually for in-state tuition, with out-of-state students paying more than $19,000. For two decades ending in 2013, college costs have risen 1.6% more than inflation each year. Government funding per student fell 27% between 2007 and 2012. Student enrollments rose from 15.2 million in 1999 to 20.4 million in 2011, but fell 2% in 2012.
National debt of the United States
Historically, the share held by foreign governments had grown over time, rising from 13 percent of the public debt in 1988 to 34 percent in 2015. In more recent years, foreign ownership has retreated both in percent of total debt and total dollar amounts. China's maximum holding of 9.1% or $1.3 trillion of US debt occurred in 2011, subsequently reduced to 5% in 2018. Japan's maximum holding of 7% or $1.2 trillion occurred in 2012, subsequently reduced to 4% in 2018.
National debt of the United States
The US national debt can be divided between intragovernmental debt and publicly held debt.
United States debt-ceiling crisis of 2011
According to the Treasury, "failing to increase the debt limit would . . . cause the government to default on its legal obligations – an unprecedented event in American history". These legal obligations include paying Social Security and Medicare benefits, military salaries, interest on the debt, and many other items. Making the promised payments of the principal and interest of US treasury securities on time ensures that the nation does not default on its sovereign debt.
National debt of the United States
In April 1979, however, the United States may have technically defaulted on $122 million in Treasury bills, which was less than 1% of U.S. debt. The Treasury Department characterized it as a delay rather than as a default, but it did have consequences for short-term interest rates, which jumped 0.6%. Others view it as a temporary, partial default.
United States
As for public expenditures on higher education, the U.S. trails some other OECD nations but spends more per student than the OECD average, and more than all nations in combined public and private spending. , student loan debt exceeded 1.5 trillion dollars, more than Americans owe on credit cards.
Canadian public debt
The Canadian government debt, commonly called the "public debt" or the "national debt", is the amount of money owed by the Government of Canada to holders of Canadian Treasury security. In 2014, this number stood at CAD$1.4 trillion across federal and provincial governments. With the total GDP somewhere around CAD$1.8 trillion, Canada's overall debt/GDP ratio is around 77%. "Gross debt" is the national debt plus intragovernmental debt obligations or debt held by trust funds. Types of securities sold by the government include treasury bills, notes, bonds, Real Return Bonds, Canada Savings Bonds, and provincial government securities.
American Taxpayer Relief Act of 2012
CBO's March 2012 "Baseline scenario" assumed the total deficits for the 2013–2022 period would be $2,887 billion. Debt held by the public (a partial measure of the national debt) at the end of 2022 would be $15,115 billion, resulting in a ratio of debt held by the public to GDP of 61.3%. The ratio was projected to be 73.2% in 2012. Applying the amounts in the ATRA to the baseline (a rough approximation pending further CBO scoring), passage of the ATRA "raises" the:
United States debt-ceiling crisis of 2011
Geithner responded that prioritizing debt would require "cutting roughly 40 percent of all government payments", which could only be achieved by "selectively defaulting on obligations previously approved by Congress". He argued that this would harm the reputation of the United States so severely that there is "no guarantee that investors would continue to re-invest in new Treasury securities", forcing the government to repay the principal on existing debt as it matured, which it would be unable to do under any conceivable circumstance. He concluded: "There is no alternative to enactment of a timely increase in the debt limit." On January 25, 2011, Senator Toomey introduced The Full Faith And Credit Act bill [S.163] that would require the Treasury to prioritize payments to service the national debt over other obligations. (The bill was cleared by its committee for consideration the next day and added to the Senate "calendar of business", but no further action had occurred by mid-August 2011.)
History of United States debt ceiling
Except for about a year during 1835–1836, the United States has continuously had a fluctuating public debt since the US Constitution legally went into effect on March 4, 1789. Debts incurred during the American Revolutionary War and under the Articles of Confederation led to the first yearly report on the amount of the debt ($75,463,476.52 on January 1, 1791). Every president since Herbert Hoover has added to the national debt expressed in absolute dollars.
United States debt ceiling
In December 2012, Treasury calculated that $239 million in United States Notes were in circulation. These Notes, in accordance the debt ceiling legislation, are excluded from the statutory debt limit. The $239 million excludes $25 million in United States Notes issued prior to July 1, 1929, determined pursuant to Act of June 30, 1961, 31 U.S.C. 5119, to have been destroyed or irretrievably lost.
Monetary reform in the United States
Monetary reform, the reform of monetary creation and thus of the banking system, is a topical political issue in the United States, especially in light of the public debt (15 trillion dollar in November 2011), household debt (student debts, etc.), Social Security and other public sector undertakings and state debts. The financial crisis that began in U.S. in the fall of 2007 and subsequently affected large parts of the world, and was followed by massive bank rescues (so-called bailouts), also plays a major role in this context as well as criticism of Federal Reserve. Strictly speaking, there are two separate movements for monetary reform in the U.S., one is more left-wing and the other is more right-wing. In Congress these views are represented mainly by Dennis Kucinich, which belong to the progressive left, and Ron Paul, known right-wing "Fed critics." The debate often focuses on questions such as how the banking system works today, debts, bailouts, the Federal Reserve, and more. But history is also alive in the debate, for example is Abraham Lincoln's so-called Greenbacks something that often is mentioned. The main American organization for "monetary reform" is the American Monetary Institute.
United States debt ceiling
The United States debt ceiling or debt limit is a legislative limit on the amount of national debt that can be incurred by the US Treasury, thus limiting how much money the federal government may borrow. The debt ceiling is an aggregate figure which applies to the gross debt, which includes debt in the hands of the public and in intra-government accounts. (About 0.5% of debt is not covered by the ceiling.) Because expenditures are authorized by separate legislation, the debt ceiling does not directly limit government deficits. In effect, it can only restrain the Treasury from paying for expenditures and other financial obligations after the limit has been reached, but which have already been approved (in the budget) and appropriated.
National debt of the United States
The U.S. government is obligated under current law to make mandatory payments for programs such as Medicare, Medicaid and Social Security. The Government Accountability Office (GAO) projects that payouts for these programs will significantly exceed tax revenues over the next 75 years. The Medicare Part A (hospital insurance) payouts already exceed program tax revenues, and social security payouts exceeded payroll taxes in fiscal 2010. These deficits require funding from other tax sources or borrowing. The present value of these deficits or unfunded obligations is an estimated $45.8 trillion. This is the amount that would have had to be set aside in 2009 in order to pay for the unfunded obligations which, under current law, will have to be raised by the government in the future. Approximately $7.7 trillion relates to Social Security, while $38.2 trillion relates to Medicare and Medicaid. In other words, health care programs will require nearly five times more funding than Social Security. Adding this to the national debt and other federal obligations would bring total obligations to nearly $62 trillion. However, these unfunded obligations are not counted in the national debt, as shown in monthly Treasury reports of the national debt.
United States debt-ceiling crisis of 2011
, approximately 40 percent of US government spending relied on borrowed money. That is, without borrowing, the federal government would have had to cut spending immediately by 40 percent, affecting many daily operations of the government, besides the impact on the domestic and international economies. It is unclear if the Treasury has the technological capability to disperse funds to some individuals it owes money. The Government Accountability Office reported in February 2011 that managing debt when delays in raising the debt limit occur diverts Treasury's resources away from other cash and debt management responsibilities and that Treasury's borrowing costs modestly increased during debt limit debates in 2002, 2003, 2010 and 2011. If the interest payments on the national debt are not made, the US would be in default, potentially causing catastrophic economic consequences for the US and the wider world as well. (Effects outside the US would be likely because the United States is a major trading partner with many countries. Other major world powers who hold its debt could demand repayment.)
Deficit reduction in the United States
Net interest costs paid on the public debt declined from $203 billion in 2011 to $187 billion in 2012 because of lower interest rates. Should these rates return to historical averages, the interest cost would increase dramatically.
Student debt
There were around 37 million student loan borrowers with outstanding student loans in 2013. According to the Federal Reserve Bank of New York, outstanding student loan debt in the United States lies between $902 Billion and $1 Trillion with around $864 Billion in Federal student loan debt. As of Quarter 1 in 2012, the average student loan balance for all age groups is $24,301. About one-quarter of borrowers owe more than $28,000; 10% of borrowers owe more than $54,000; 3% owe more than $100,000; and less than 1%, or 167,000 people, owe more than $200,000. Of the 37 million borrowers who have outstanding student loan balances, 14%, or about 5.4 million borrowers, have at least one past due student loan account. For every student loan borrower who defaults, at least two more borrowers become delinquent without default. In 2010 for the first time ever, student loan debt exceeded credit card debt and in 2011 student debt surpassed auto loans (both of which were decreasing). According to Mark Kantrowitz, publisher of FinAid.org, student loan debt is growing by $3,000 per second. According to a report by The Institute for College Access and Success the average debt from those who graduated in 2013 topped $30,000 in six states and was only below $20,000 in one state. Data released by the Federal Reserve Bank of New York showed that in the fourth quarter of 2014 delinquency rates for students dipped to the point where approximately one in nine student loans is past due. As of 2015 over half of outstanding student loans are in deferral, delinquency or default. Rising student loan debt is exacerbating wealth inequality.
National debt of the United States
There is debate regarding the economic nature of the intragovernmental debt, which was approximately $4.6 trillion in February 2011. For example, the CBPP argues: that "large increases in [debt held by the public] can also push up interest rates and increase the amount of future interest payments the federal government must make to lenders outside of the United States, which reduces Americans' income. By contrast, intragovernmental debt (the other component of the gross debt) has no such effects because it is simply money the federal government owes (and pays interest on) to itself."
United States debt-ceiling crisis of 2011
The US has had public debt since its inception. Debts incurred during the American Revolutionary War and under the Articles of Confederation led to the first yearly report on the amount of the debt ($75,463,476.52 on January 1, 1791). Every president since Harry Truman has added to the national debt. The debt ceiling has been raised 74 times since March 1962, including 18 times under Ronald Reagan, eight times under Bill Clinton, seven times under George W. Bush and three times () under Barack Obama.
History of the United States public debt
Debt held by the public relative to GDP rose rapidly again in the 1980s. President Ronald Reagan's economic policies lowered tax rates (Reagan slashed the top income tax rate from 70% to 28%, although bills passed in 1982 and 1984 later partially reversed those tax cuts.) and increased military spending, while congressional Democrats blocked cuts to social programs. As a result, debt as a share of GDP increased from 26.2% in 1980 to 40.9% in 1988, and it continued to rise during the presidency of George H. W. Bush, reaching 48.3% of GDP in 1992.
United States federal budget
CBO estimated under the baseline scenario that the U.S. debt held by the public would increase approximately $8.5 trillion between the end of 2014 and 2024. Under a $2 trillion deficit reduction scenario during that first decade, federal debt held by the public in 2039 would stand at 75 percent of GDP, only slightly above the value of 72 percent at the end of 2013. Under a $4 trillion deficit reduction scenario for that decade, federal debt held by the public would fall to 42 percent of GDP in 2039. By comparison, such debt was 35 percent of GDP in 2007 and has averaged 39 percent of GDP during the past 40 years.
Presidency of Barack Obama
US government debt grew substantially during the Great Recession, as government revenues fell and Obama largely eschewed the austerity policies followed by many European countries. US government debt grew from 52% of GDP when Obama took office in 2009 to 74% in 2014, with most of the growth in debt coming between 2009 and 2012. In 2010, Obama ordered the creation of the National Commission on Fiscal Responsibility and Reform (also known as the "Simpson-Bowles Commission") in order to find ways to reduce the country's debt. The commission ultimately released a report that called for a mix of spending cuts and tax increases. Notable recommendations of the report include a cut in military spending, a scaling back of tax deductions for mortgages and employer-provided health insurance, a raise of the Social Security retirement age, and reduced spending on Medicare, Medicaid, and federal employees. The proposal never received a vote in Congress, but it served as a template for future plans to reduce the national debt.
United States debt ceiling
Management of the United States public debt is an important part of the macroeconomics of the United States economy and finance system, and the debt ceiling is a constraint on the executive's ability to manage the U.S. economy. There is debate, however, on how the U.S. economy should be managed, and whether a debt ceiling is an appropriate mechanism for restraining government spending.
Mortgage note
In the United Kingdom, mortgage-related debt amounts to over £1 trillion. In the United States bond market, mortgage-related debt amounts to $6.5 trillion and accounted for 23% of the market as of December 31, 2006. In 2006, $1.93 trillion of mortgage debt was issued on the US bond market; this is roughly the GDP of the United Kingdom, and is larger than any other debt category.
History of the United States public debt
The difference between the projected and actual debt in 2011, the budget office said, could be attributed largely to:
History of the United States public debt
Growth rates in Western countries began to slow in the mid-1960s. Beginning in the mid-1970s and afterwards, U.S. national debt began to increase faster than GDP.
Financial position of the United States
As of 2009, there was $50.7 trillion of debt owed by US households, businesses, and governments, representing more than 3.5 times the annual gross domestic product of the United States. As of the first quarter of 2010, domestic financial assets totaled $131 trillion and domestic financial liabilities $106 trillion. Tangible assets in 2008 (such as real estate and equipment) for selected sectors totaled an additional $56.3 trillion.
History of the United States public debt
In 1836 US started to have debt one more time (the debt on January 1, 1836 was $37,000).
National debt of the United States
However, if the U.S. government continues to run "on budget" deficits as projected by the CBO and OMB for the foreseeable future, it will have to issue marketable Treasury bills and bonds (i.e., debt held by the public) to pay for the projected shortfall in the Social Security program. This will result in "debt held by the public" replacing "intragovernmental debt".
Financial position of the United States
Bonds represent the next largest part of financial sector debt. In 1946, bonds represented 6% of financial sector debt, but by 1953 this proportion had risen to 24%. This remained relatively constant until the late 1970s; bonds fell to 14% of financial sector debt in 1981. This coincided with Federal Reserve chairman Paul Volcker's strategy of combating stagflation by raising the federal funds rate; as a result the prime rate peaked at 21.5%, making financing through credit markets prohibitively expensive. Bonds recovered in the 1980s, representing approximately 25% of financial sector debt throughout the 1990s; however, between 2000 and 2009, bonds issued by the financial sector had increased to 37% of financial sector debt, or $5.8 trillion.
Political debates about the United States federal budget
The CBO also provides a long term forecast (30 years) as part of their "CBO Long-Term Budget Outlook" annual report. Over the longer-term, the U.S. faces budgetary challenges primarily related to an aging population, along with healthcare costs growing faster than inflation, which are increasing the spending relative to GDP for mandatory programs such as Social Security and Medicare. Under current law, future deficits driven primarily by these programs are expected to drive larger amounts of debt and interest payments, particularly as interest rates return to more normal levels from the unusually low levels during the aftermath of the Great Recession. For example, Social Security spending relative to GDP is expected to rise from 4.9% GDP in 2016 to 6.2% GDP by over the 2027–2036 period; for Medicare, these figures are 3.8% GDP and 5.5% GDP, respectively. Without changes that increase revenues or reduce the rate of spending increases relative to GDP or both, U.S. debt held by the public will rise beyond the 100% GDP level by 2030, a level last seen in the aftermath of World War 2.
Fiscal conservatism
According to a United States Department of the Treasury nonpartisan economic study, the major tax bills enacted under Reagan caused federal revenue to fall by an amount equal to roughly 1% of GDP. By the end of Reagan's second term, the national debt held by the public increased by almost 60%, and the total debt equalled $2.6 trillion. In fewer than eight years, the U.S. went from being the world's largest creditor nation to the world's largest debtor nation.
United States debt-ceiling crisis of 2013
The 2013 United States debt-ceiling crisis centered on the raising of the federal government debt ceiling, and is part of an ongoing political debate in the United States Congress about federal government spending and the national debt. The crisis began in January 2013, when the United States reached the debt ceiling of $16.394 trillion that had been enacted following the debt ceiling crisis of 2011.
Balance sheet recession
U.S. household debt rose from approximately 65% GDP in Q1 2000 to 95% by Q1 2008. This was driven by a housing bubble, which encouraged Americans to take on larger mortgages and use home equity lines of credit to fuel consumption. Mortgage debt rose from $4.9 trillion in Q1 2000 to a peak of $10.7 trillion by Q2 2008. However, it has fallen since as households deleverage, to $9.3 trillion by Q1 2014.
United States fiscal cliff
Therefore, since the total U.S. public debt was approximately $11.053 trillion as of July 2012, the public debt will climb by the end of FY2013 to either $11.664 trillion.
History of the United States public debt
The Obama Administration also made four significant accounting changes to more accurately report total federal government spending. The four changes were: 
Obama administration officials predicted that these changes will make the debt over ten years look $2.7 trillion larger than it would otherwise appear.
Student loans in the United States
"The Economist" reported in June 2014 that United States student loan debt exceeded $1.2 trillion, with over 7 million debtors in default. Debt and default among black college students is at crisis levels, and even a bachelor’s degree is no guarantee of security: black BA graduates default at five times the rate of white BA graduates (21 versus 4 percent), and are more likely to default than white dropouts. Public universities increased their fees by a total of 27% over the five years ending in 2012, or 20% adjusted for inflation. Public university students paid an average of almost $8,400 annually for in-state tuition, with out-of-state students paying more than $19,000. For two decades ending in 2013, college costs have risen 1.6% more than inflation each year. Government funding per student fell 27% between 2007 and 2012. Student enrollments rose from 15.2 million in 1999 to 20.4 million in 2011, but fell 2% in 2012.
National debt of the United States
The national debt of the United States is the debt, or unpaid borrowed funds, carried by the federal government of the United States, which is measured as the face value of the currently outstanding Treasury securities that have been issued by the Treasury and other federal government 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. A deficit year increases the debt, while a surplus year decreases the debt as more money is received than spent.
National debt of the United States
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. 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.
National debt of the United States
According to the "CIA World Factbook", during 2015, the U.S. debt to GDP ratio of 73.6% was the 39th highest in the world. This was measured using "debt held by the public." However, $1 trillion in additional borrowing since the end of FY 2015 has raised the ratio to 76.2% as of April 2016 [See Appendix#National debt for selected years]. Also, this number excludes state and local debt. According to the OECD, general government gross debt (federal, state, and local) in the United States in the fourth quarter of 2015 was $22.5 trillion (125% of GDP); subtracting out $5.25 trillion for intergovernmental federal debt to count only federal "debt held by the public" gives 96% of GDP.
Political debates about the United States federal budget
Paul Krugman argued in May 2010 that the debt held by the public is the right measure to use, while Reinhart testified to the National Commission on Fiscal Responsibility and Reform that gross debt is the appropriate measure. Certain members of the Commission are focusing on gross debt. The Center on Budget and Policy Priorities (CBPP) cited research by several economists supporting the use of the lower debt held by the public figure as a more accurate measure of the debt burden, disagreeing with these Commission members.
National debt of Japan
The Japanese public debt exceeded one quadrillion yen or about US$10.46 trillion in 2013, more than twice the country's annual gross domestic product. By 2015, the figure rose to US$11.06 trillion. As the country adopted key economic initiatives, this figure start to dip so that by the end of December 2017, the debt stood at US$9.94 trillion.
History of the United States public debt
Debt held by the public reached a high of 49.5% of GDP at the beginning of President Clinton's first term. However, it fell to 34.5% of GDP by the end of Clinton's presidency due in part to decreased military spending, increased taxes (in 1990, 1993 and 1997), and increased tax revenue resulting from the 1990s boom. The budget controls instituted in the 1990s successfully restrained fiscal action by the Congress and the President and together with economic growth contributed to the budget surpluses at the end of the decade. The surpluses led to a decline in the public debt from about 43% of GDP in 1998 to about 33% by 2001.
United States
The total national debt of the United States in the United States was $18.527 trillion (106% of the GDP) in 2014.
Debt relief
Debt relief existed in a number of ancient societies:
In the United States of America for the years preceding the Financial crisis of 2007–2008, non-housing personal debt (auto loans, credit cards, student loans, etc.) rose significantly from approximately $2.05 trillion at the start of 2003 to a peak of $2.71 in Q4 of 2008. It was not until Q3 of 2012 that unsecured personal debt reached this level again. Since that time, unsecured personal debt has risen steadily to $3.76 trillion at the end of the third quarter of 2017. The other large change in unsecured personal debt is that an increasing portion of it is now student loan debt, from 12% in Q1 of 2003 to 53% in Q3 of 2017.
American Theocracy
Phillips points to the unprecedented national debt, currently approaching eighteen trillion dollars. He also points to a "debt culture." He suggests underlying problems because the "debt industry" is larger than industries that actually manufacture goods (such as the automotive industry). He suggests a coming debt bubble. He predicts a liquidation of U.S. government debt by foreign creditors, and mass insolvency of consumers.
History of the United States public debt
The debts of the federal government on January 1, 1791 amounted to $75,463,476.52, of which about $40 million was domestic debt, $12 million was foreign debt, and $18.3 million were state debts assumed by the federal government, of the $21.5 million that had been authorized.
National debt of the United States
The national debt can also be classified into marketable or non-marketable securities. Most of the marketable securities are Treasury notes, bills, and bonds held by investors and governments globally. The non-marketable securities are mainly the "government account series" owed to certain government trust funds such as the Social Security Trust Fund, which represented $2.82 trillion in 2017.
Great Recession in the United States
Households and non-profit organizations added approximately $8 trillion in debt during the 2000-2008 period (roughly doubling it and fueling the housing bubble), then reduced their debt level from the peak in Q3 2008 until Q3 2012, the only period this debt declined since at least the 1950s. However, the debt held by the public rose from 35% GDP in 2007 to 77% GDP by 2016, as the government spent more while the private sector (e.g., households and businesses, particularly the banking sector) reduced the debt burdens accumulated during the pre-recession decade. President Obama declared the bailout measures started under the Bush Administration and continued during his Administration as completed and mostly profitable as of December 2014.
National debt of the United States
Despite rising debt levels, interest costs have remained at approximately 2008 levels (around $450 billion in total) due to lower than long-term interest rates paid on government debt in recent years. However, interest rates may return to higher historical levels.
Political debates about the United States federal budget
Both the debt held by the public in dollars and as ratio relative to the size of the economy (GDP) are common measures. The CBO reports these amounts since fiscal year 1967 in the "Historical Budget Data" accompanying their "Budget and Economic Outlook" report, published annually in January.
Economy of the United States
Debt held by the public, a measure of national debt, has risen throughout the 21st century, rising from 31% in 2000 to 52% in 2009 and 77% of GDP in 2017, which was ranked 43rd highest out of 207 countries. Income inequality peaked in 2007 and fell during the Great Recession, yet still ranked 41st highest among 156 countries in 2017 (i.e., 74% of countries had a more equal income distribution).
United States balance of trade
In 2006, the primary economic concerns focused on: high national debt ($9 trillion), high non-bank corporate debt ($9 trillion), high mortgage debt ($9 trillion), high financial institution debt ($12 trillion), high unfunded Medicare liability ($30 trillion), high unfunded Social Security liability ($12 trillion), high external debt (amount owed to foreign lenders) and a serious deterioration in the United States net international investment position (NIIP) (−24% of GDP), high trade deficits, and a rise in illegal immigration.
United States debt-ceiling crisis of 2011
Throughout 2011, Standard & Poor's and Moody's credit rating services issued warnings that US debt could be downgraded because of the continued large deficits and increasing debt. According to the CBO's 2011 long-term budget outlook, without major policy changes the large budget deficits and growing debt would continue, which "would reduce national saving, leading to higher interest rates, more borrowing from abroad, and less domestic investment – which in turn would lower income growth in the United States." The European sovereign debt crisis was occurring throughout 2010–2011, and there were concerns that the US was on the same trajectory.
Debt levels and flows
Worldwide Debt, Equity and Equity-related issuance reached record-breaking levels with over $5 trillion in proceeds raised, surpassing 2001's record of $4.4 trillion. The $5 trillion of borrowings represented 14% of the GDP flow during the year (4.938/36.3) (see world economy). 93% of the issuance was debt, 7% was equity. Note that these numbers don't include all mortgage borrowing, which was $3.8 trillion in the United States during 2003. $900 billion of it is in mortgage-backed securities, at least $546 billion in US Federal Credit Agency.
Foreign trade of the United States
In 2006, the primary economic concerns focused on: high national debt ($9 trillion), high non-bank corporate debt ($9 trillion), high mortgage debt ($9 trillion), high financial institution debt ($12 trillion), high unfunded Medicare liability ($30 trillion), high unfunded Social Security liability ($12 trillion), high external debt (amount owed to foreign lenders) and a serious deterioration in the United States net international investment position (NIIP) (−24% of GDP), high trade deficits, and a rise in illegal immigration.
History of the United States public debt
On August 5, 2011, the United States debt-ceiling crisis of 2011, the credit rating agency Standard & Poor's downgraded the rating of the federal government from AAA to AA+. It was the first time the U.S. had been downgraded since it was originally given a AAA rating on its debt by Moody's in 1917. BBC News reported that Standard & Poor's had "lost confidence" in the ability of the U.S. government to make decisions.
History of United States debt ceiling
Subsequent Public Debt Acts amended the aggregate debt limit: the 1942, 1943, 1944, and 1945 acts raised the limit to $125 billion, $210 billion, $260 billion, and $300 billion respectively. In 1946, the Public Debt Act was amended to reduce the debt limit to $275 billion. The limit stayed unchanged until 1954, the Korean War being financed through taxation.
United States debt ceiling
Following the increase in the debt ceiling to $16.394 trillion in 2011, the United States again reached the debt ceiling on December 31, 2012 and the Treasury began taking extraordinary measures. The fiscal cliff was resolved with the passage of the American Taxpayer Relief Act of 2012 (ATRA), but no action was taken on the debt ceiling. Following the tax cuts from ATRA, the government needed to raise the debt ceiling by $700 billion to finance operations for the rest of the 2013 fiscal year. Extraordinary measures were expected to be exhausted by February 15. The Treasury had said it is not set up to prioritize payments, and has given the opinion that it is unclear whether it would be legal to do so. Given this situation, the Treasury would simply delay payments if funds could not be raised through extraordinary measures and the debt ceiling not raised. Economists estimated that such an action would cause GDP to contract by 7%, which is larger than the contraction during the Great Recession. The economic damage would worsen as recipients of social security benefits, government contracts, and other government payments cut back on spending in response to having the freeze in their revenue.
Political debates about the United States federal budget
The Treasury Department provides data on the national debt at points in time through its "Treasury Direct" website. It publishes a monthly "Debt position and activity report" which includes the debt held by the public, the intra-governmental debt, and national debt ("Total public debt outstanding"). As of December 31, 2016, these amounts were:
History of United States debt ceiling
In 1939, Congress instituted the first limit on total accumulated debt over all kinds of instruments. The debt ceiling, in which an aggregate limit is applied to nearly all federal debt, was substantially established by Public Debt Acts passed in 1939 and 1941 and subsequently amended. The United States Public Debt Act of 1939 eliminated separate limits on different types of debt. The Public Debt Act of 1941 raised the aggregate debt limit on all obligations to $65 billion, and consolidated nearly all federal borrowing under the U.S. Treasury and eliminated the tax-exemption of interest and profit on government debt.
Economic policy of the Barack Obama administration
The national debt increased from $10.0 trillion in September 2008 to $19.6 trillion in September 2016. As described above, roughly $3 trillion of this increase was anticipated in the January 2009 CBO baseline forecast, or $6–8 trillion adjusting for the extension of the Bush tax cuts and other baseline overrides typically legislated. Obama ultimately extended the Bush tax cuts for approximately 98% of taxpayers as part of the American Taxpayer Relief Act of 2012, allowing taxes to rise on the top 1–2% of income earners. This extension represented about 80% of the dollar value of the tax cuts. The debt held by the public (which excludes intra-governmental liabilities like the Social Security Trust Fund) rose from around 36% GDP in 2009 to 76% GDP in 2016, the highest level except for the post World War 2 era.
Expenditures in the United States federal budget
Budgeted net interest on the public debt was approximately $245 billion in FY2012 (7% of spending). During FY2012, the government also accrued a non-cash interest expense of $187 billion for intra-governmental debt, primarily the Social Security Trust Fund, for a total interest expense of $432 billion. This accrued interest is added to the Social Security Trust Fund and therefore the national debt each year and will be paid to Social Security recipients in the future. However, since it is a non-cash expense it is excluded from the budget deficit calculation.
Economic policy of the George W. Bush administration
CBO reported that debt held by the public, a partial measure of the national debt, rose from $3.41 trillion in 2000 (33.6% GDP) to $5.80 trillion in 2008 (39.3% GDP). However, CBO had forecast in 2001 that debt held by the public would fall to $1.0 trillion by 2008 (7.1% GDP).
Student loans in the United States
In June 2010, the amount of student loan debt held by Americans exceeded the amount of credit card debt held by Americans. At that time, student loan debt totaled at least $830 billion, of which approximately 80% was federal student loan debt and 20% was private student loan debt. By the fourth quarter of 2015, total outstanding student loans owned and securitized had risen to, and surpassed, $1.3 trillion. This rising student debt is contributing to the expanding wealth gap.
History of the United States public debt
Publicly held debt is the gross debt minus intra-governmental obligations (such as the money that the government owes to the two Social Security Trust Funds, the Old-Age, Survivors, and Disability Insurance program, and the Social Security Disability Insurance program).
History of the United States public debt
In October 2009, the Congressional Budget Office (CBO) gave the reasons for the higher budget deficit in 2009 ($1,410 billion, i.e. $1.41 trillion) over that of 2008 ($460 billion). The major changes included: declines in tax receipt of $320 billion due to the effects of the recession and another $100 billion due to tax rate cuts in the stimulus bill (the American Recovery and Reinvestment Act or ARRA); $245 billion for the Troubled Asset Relief Program (TARP) and other bailout efforts; $100 billion in additional spending for ARRA; and another $185 billion due to increases in primary budget categories such as Medicare, Medicaid, unemployment insurance, Social Security, and Defense – including the war effort in Afghanistan and Iraq. This was the highest budget deficit relative to GDP (9.9%) since 1945. The national debt increased by $1.9 trillion during FY2009, versus the $1.0 trillion increase during 2008.
Deficit reduction in the United States
In January 2017, the Congressional Budget Office reported its baseline budget projections for the 2017–2027 time periods, based on laws in place as of the end of the Obama administration. CBO forecasted that "debt held by the public" would increase from $14.2 trillion in 2016 to $24.9 trillion by 2027, an increase of $10.7 trillion. These increases are primarily driven by an aging population, which impacts the costs of Social Security and Medicare, along with interest on the debt. As President Trump introduces his budgetary policies, the impact can be measured against this baseline.
National debt of the United States
In an October 16, 2018 interview with Bloomberg News, Mitch McConnell said that the debt was driven by "the three big entitlement programs that are very popular, Medicare, Social Security and Medicaid." He says that, "There's been a bipartisan reluctance to tackle entitlement changes because of the popularity of those programs. Hopefully, at some point here, we'll get serious about this."
History of the United States public debt
In June 2012, the Congressional Budget Office summarized the cause of change between its January 2001 estimate of a $5.6 trillion cumulative surplus between 2002 and 2011 and the actual $6.1 trillion cumulative deficit that occurred, an unfavorable "turnaround" or debt increase of $11.7 trillion. Tax rate cuts and slower-than-expected growth reduced revenues by $6.1 trillion and spending was $5.6 trillion higher. Of this total, the CBO attributes 72% to legislated tax rate cuts and spending increases and 27% to economic and technical factors. Of the latter, 56% occurred from 2009 to 2011.
National debt of the United States
As of December 31, 2018, debt held by the public was $16.1 trillion and intragovernmental holdings were $5.87 trillion, for a total or "National Debt" of $21.97 trillion. Debt held by the public was approximately 76.4% of GDP in Q3 2018. In 2017, the US debt-to-GDP ratio was ranked 43rd highest out of 207 countries. The Congressional Budget Office forecast in April 2018 that the ratio will rise to nearly 100% by 2028, perhaps higher if current policies are extended beyond their scheduled expiration date.
United States debt ceiling
Prior to 1917, the United States had no debt ceiling. Congress either authorized specific loans or allowed Treasury to issue certain debt instruments and individual debt issues for specific purposes. Sometimes Congress gave Treasury discretion over what type of debt instrument would be issued. The United States first instituted a statutory debt limit with the Second Liberty Bond Act of 1917. This legislation set limits on the aggregate amount of debt that could be accumulated through individual categories of debt (such as bonds and bills). In 1939, Congress instituted the first limit on total accumulated debt over all kinds of instruments.
Government spending in the United States
Oftentimes, federal governments spend more money than they collect in tax revenue in a given year. When the government spends more than it brings in, it runs a Budget Deficit that year. In order to pay for the extra spending, governments issue debt. Government debt is the amount of money borrowed from individuals, firms, or foreign entities. Debt accrues over time. Most public debt is held in the form of treasury bills and bonds, and the government has to pay down debt over time. In order to provide an incentive for individuals, businesses and other entities to lend money, the government must also pay these parties interest on the debt. The interest expense for fiscal year 2019 is $363 billion, or 7.9% of the total budget. According to estimates from the Office of Management and Budget, interest on government debt is expected to more than double by 2028 and account for a larger percentage of total expenditures.
Political debates about the United States federal budget
If the U.S. continues to run "on budget" deficits as projected by the CBO and OMB for the foreseeable future, it will have to issue marketable Treasury bills and bonds (i.e., debt held by the public) to pay for the projected shortfall in the Social Security program. This will result in "debt held by the public" replacing "intragovernmental debt" to the extent of the Social Security Trust Fund during the period the Trust Fund is liquidated, which is expected to occur between 2015 and the mid-2030s. This replacement of intragovernmental debt with debt held by the public would not occur if: a) The U.S. runs on-budget surpluses sufficient to offset "off-budget" deficits in the Social Security program; or b) Social Security is reformed to maintain an off-budget surplus.
Financial position of the United States
Since 2010, the U.S. Treasury has been obtaining negative real interest rates on government debt. 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. Lawrence Summers, Matthew Yglesias and other economists state that at such low rates, government debt borrowing saves taxpayer money, and improves creditworthiness. In the late 1940s through the early 1970s, the US 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 so low. In January, 2012, the U.S. Treasury Borrowing Advisory Committee of the Securities Industry and Financial Markets Association unanimously recommended that government debt be allowed to auction even lower, at negative absolute interest rates.