National Debt Definition

The national debt is a government’s sum of all deficits minus the sum of all surpluses from this and previous years. The more a government borrows each year, the more the national debt rises.

Example of a National Debt Calculation

If, hypothetically, a country is running a deficit in year 1 of \$250 billion, in year 2 of \$300 billion, in year 3 of \$200 billion, and in year 4, a surplus of \$100 billion, then (assuming no other deficits or surpluses) the country’s total national debt is

\$250 + \$300 + \$200 -\$100 = \$650 billion

United States National Debt Data

In the United States, at the beginning of the Reagan administration in 1980, the national debt was “only” \$930 billion (see table below). It then grew to \$2,600 billion by the end of his administration in 1988, an almost three-fold increase. It has continued to increase thereafter at a rapid pace during most years. Currently, in the United States, stimulus spending, the increasing burden of the Social Security program, rising costs of health and medical programs, defense-related spending, and  rising interest payments on the national debt are putting a strain on the government’s purse. This year the United States national debt will approach \$32 trillion. For an up-to-the-minute account of our national debt, please see: US National Debt Clock.

Below is a table with United States National Debt figures for selected years since 1945. This table also includes the debt as a percentage of the size of our economy (as measured by nominal GDP). The percentage was 116% during World War II and dropped to a post-World War II low of 33%  in 1980. By the end of 2023, the debt : GDP percentage was 123%.

 Year Total National Debt  (held by the public and the Federal Reserve, and foreign, state and local governments, rounded to the nearest billion dollar – December 31). Nominal GDP (rounded to the nearest billion dollar) National Debt as a Percentage of Nominal GDP (rounded to the nearest whole number) 1945 259 223 116 1950 257 294 87 1960 290 526 55 1970 389 1,039 37 1980 930 2,790 33 1985 1,946 4,220 46 1990 3,233 5,803 56 1995 4,974 7,398 67 2000 5,674 9,817 58 2001 5,807 10,128 57 2002 6,288 10,470 60 2003 6,783 10,961 62 2004 7,379 11,713 63 2005 7,933 12,455 63 2006 8,420 13,377 64 2007 9,008 14,029 64 2008 9,353 14,292 66 2009 12,816 13,974 92 2010 14,025 14,499 97 2011 15,053 15,076 100 2012 16,353 15,536 105 2013 17,440 16,768 104 2014 18,898 17,272 109 2015 19,336 18,036 107 2016 19,950 18,800 106 2017 20,615 19,500 106 2018 21,908 20,821 105 2019 23,164 21,695 107 2020 26,545 20,894 127 2021 29,338 23,202 126 2022 31,465 25,660 123 2023 33,888 27,610 123

National Debt Source: U.S. Treasury Department (https://fiscaldata.treasury.gov/americas-finance-guide/national-debt)
Nominal GDP Source: Bureau of Economic Analysis (https://www.bea.gov/data/gdp/gross-domestic-product)

Interest on the Debt

When a country borrows money from its citizens and from foreign investors, it pays interest each year to them. The interest is similar to a finance charge you pay on a credit card balance if you don’t pay it off at the end of the month. Below is a table with United States federal government total interest expenses in selected years (this figure does not include interest the federal government receives on its own investments). In some years, the total debt increases, while the total interest expense decreases, and vice versa. This is due to interest rate fluctuations. During years when market interest rates are lower, the government can finance its debt at more favorable conditions. Until 2021, interest rates have been relatively low in the United States and other industrialized countries. This has allowed these governments to borrow at low rates and has allowed them to pay less interest than would have been the case at higher rates. With rising national debts, and higher interest rates during the past years, the total interest expense has risen considerably recently.

 Year Total United States Interest Expense (on Treasury debt securities; rounded to the nearest billion dollar, as per fiscal year end) 1990 265 1995 332 2000 361 2001 359 2002 332 2003 318 2004 321 2005 352 2006 406 2007 430 2008 451 2009 383 2010 414 2011 454 2012 360 2013 416 2014 431 2015 402 2016 447 2017 459 2018 523 2019 575 2020 523 2021 562 2022 581 2023 659

Source: U.S. Treasury Department (https://www.treasurydirect.gov/).

The Debt Ceiling (Limit)

The United States has an official Congressional limit on how much it can borrow. Because the federal government continues to borrow more and more each year, this limit has been reached and then raised by Congress many times. If the limit is reached and the government doesn’t raise the limit, then parts of the government will need to be shut down and some government employees will not be able to get paid. Frequently the government doesn’t raise the limit right away because politicians use the limit to negotiate their position on the budget (or other issues). For example, some politicians will only raise the limit if Congress promises to significantly cut overall spending. Or other politicians will raise the limit only if Congress spends more money on their favorite items (green energy, social programs, defense, building a wall, etc.). After several weeks of government shutdown, complaints by the public and government employees, and political negotiations, Congress then passes a higher debt limit and the debt will rises until another limit is reached. The United States debt limit was created in 1917 and the first time Congress raised the debt limit was in June of 1940. Since then it has been raised 93 times.