What is the US national debt and how has it grown over time?

What is the national debt?

The national debt is the total amount of outstanding borrowed money the federal government has accumulated over time. For every year the US spends more money than it earns, the result is a budget deficit.

These deficits add up over time, creating a bill the US covers by borrowing money from investors. This bill, compounded by interest owed to these investors, results in the national debt.

For every year the federal government runs a deficit, the national debt grows as a result of the increasing amount of money borrowed. The US has run a budget deficit over the last 20 years, substantially growing the national debt.

Without borrowing money, however, the government could not fund basic programs and public services critical to Americans’ health, welfare, and security.

As of May 1, 2023, the national debt stands at $31.46 trillion.

On that same day, Treasury Secretary Janet Yellen informed Congress that the government could run out of cash as early of June 1 if the debt ceiling is not raised or suspended in time.

The United States pays for its budget deficit by selling government securities, which are bonds the Treasury Department issues for short-term revenue.

These securities, which include Treasury bills, notes, bonds, and more, are then paid back by the federal government to investors at a fixed rate. This debt can be held by individuals and companies, known as public debt, or debt held by the government itself, known as intragovernmental debt.

However, since interest on the debt must be paid back to creditors who buy government securities, the government must spend a growing amount of its budget to repay the national debt. This not only creates a financial burden for the government, but also diverts federal funds from other important programs.

As a result of operating at a budget deficit for so long, the national debt has grown fivefold over the last 20 years, and is unlikely to shrink over the next several years.

While the government raises the debt ceiling to prevent defaulting on its debt, this pushes the problem further down the road, creating a mounting financial obligation that future generations will have difficulty paying.

As a result of US fiscal policy over the past several decades, the growing national debt is considered unsustainable in the intermediate- and long-term, according to a 2022 Government Accountability Office report.

How has the national debt changed over time?

The national debt has grown by $25.73 trillion since 1993. The largest single-term increases took place under President Donald Trump, largely in response to the COVID-19 pandemic, and President Barack Obama’s first term during the Great Recession.

• Under President Bill Clinton, the national debt began at approximately $4.23 trillion^[1] and grew to $5.73 trillion, a 35.5% increase.
• Under President George W. Bush, the national debt grew from $5.73 to $10.63 trillion, a 85.5% increase.
• Under President Barack Obama, the national debt grew from $10.63 to $19.96 trillion, a 87.8% increase.
• Under President Donald Trump, the national debt grew from $19.96 to $27.77 trillion, a 39.1% increase.
• As of March 1, 2023, the national debt has grown from $27.77 trillion to $31.46 trillion under President Joe Biden, a 13.3% increase.

The Congressional Budget Office (CBO), an independent agency which monitors the US budget, has indicated that the national debt is projected to continue growing at an increasing rate if current fiscal policies remain unaltered.

How is the national debt projected to grow?

The CBO publishes an annual report with budget projections for the next 30 years, considering issues such as the national debt, spending, and revenues.^[2]

According to its 2022 long-term budget outlook, the CBO projects that:

• Debt as a percentage of gross domestic product (GDP) will continue to increase over the next 30 years. Persistently growing budget deficits, which are already high, would cause federal debt held by the public to rise further.

• Steady growth in the national debt will mean a more significant portion of the federal budget paying off the interest on existing debt instead of being used elsewhere, such as programs for the American people.
• Continuing budget deficits, along with rising interest rates, would put pressure on the US economy, leading the federal debt to grow to unprecedented levels.

The CBO makes projections assuming tax laws, spending trends, GDP and other factors remain steady. These projections are not definitive, and national debt can be reduced and managed if the federal government makes the appropriate fiscal adjustments.

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