The National Debt: $36 Trillion and Growing

The national debt is the total accumulated amount the federal government owes to its creditors. It represents the sum of every annual deficit the government has run since its founding — minus any surpluses — plus accumulated interest. The debt grows whenever the government spends more in a year than it collects in taxes and other revenue.

The debt is divided into two components. Debt held by the public (roughly $28+ trillion) is owed to external parties: US individuals, US institutions like pension funds and banks, foreign governments and investors, and the Federal Reserve. Intragovernmental debt (roughly $7-8 trillion) represents money the Treasury has borrowed from government trust funds, primarily the Social Security and Medicare trust funds.

The intragovernmental debt is a commitment the government has made to itself: when Social Security taxes exceed Social Security benefit payments, the surplus is "invested" in Treasury securities, creating an obligation for the Treasury to repay that money with interest when benefits exceed contributions. This day has already arrived for Social Security, as demographics have shifted the program from surplus to deficit.

The national debt has grown under both Republican and Democratic administrations. Major contributors since 2000 include:

Bush era (2001-2009): The 2001 and 2003 tax cuts, combined with the post-9/11 wars in Afghanistan and Iraq and the 2008-2009 financial crisis recession, added roughly $6 trillion to the debt. The Bush years turned the budget surpluses of the late Clinton era into large deficits.

Obama era (2009-2017): The American Recovery and Reinvestment Act (stimulus), Affordable Care Act implementation, ongoing war spending, and slow economic recovery added roughly $9 trillion. Much of the early-term spending was emergency response to the financial crisis.

Trump first term (2017-2021): The 2017 Tax Cuts and Jobs Act reduced revenues by roughly $1.5 trillion over 10 years, and COVID-19 relief spending added several trillion in 2020 alone. The debt grew by approximately $7-8 trillion.

Biden era (2021-2025): Additional COVID relief, the Infrastructure Investment and Jobs Act, the Inflation Reduction Act, and student loan policies added roughly $5-6 trillion. Inflation temporarily increased nominal revenues but also nominal spending.

The most direct consequence of the national debt is the interest it costs. The federal government paid over $1 trillion in net interest on the debt in fiscal year 2024 — more than the defense budget for the first time in modern history. The Congressional Budget Office projects interest payments will reach $1.7-2 trillion annually within a decade under current policies.

Interest payments are mandatory spending — they cannot be cut without defaulting on US obligations. This means a larger share of the federal budget is consumed by interest costs that provide no government services, displacing potential spending on defense, infrastructure, health care, or other priorities.

Crowding out: When the government borrows heavily, it competes with private businesses for available capital in credit markets. Higher government borrowing can push interest rates up for private borrowers — raising mortgage rates, business loan rates, and corporate bond yields. This can slow private investment and economic growth.

Dollar reserve status: One reason the US has been able to carry a debt-to-GDP ratio exceeding 120% without a crisis is the dollar's status as the world's reserve currency. Global demand for US Treasuries as the world's safest store of value keeps yields lower than comparable debt levels would produce in other countries. A loss of reserve currency status — which some economists consider a long-term risk — would significantly increase the cost of US borrowing.