America's Fiscal Future - Federal Debt (2024)

Understanding the Debt

When the federal government runs a deficit, the Department of the Treasury borrows money to make up the difference between spending and revenue. Then, if special funds like the Medicare trust fund have surpluses, the “extra” revenue is lent to the rest of the federal government.

The federal debt is the total amount of money that the federal government owes, either to its investors or to itself. Total federal debt rose to $26.9 trillion at the end of fiscal year 2020.

Federal Borrowing

How the Federal Government Borrows Money

The federal government borrows money from the public by issuing securities—bills, notes, and bonds—through the Treasury. Treasury securities are attractive to investors because they are:

  • Backed by the full faith and credit of the United States government
  • Offered in a wide range of maturities
  • Exempt from state and local taxes
  • Mostly marketable, meaning they can be resold in the financial market (a small portion are nonmarketable and can’t be resold, like U.S. Savings Bonds).

Investors can easily trade Treasury securities because there are many people interested in buying and selling them at any given time. Investors are willing to pay more for this safety and liquidity—leading to lower borrowing costs (interest on the debt) for the government.

You can see a breakdown of these investors and holders of intragovernmental debt (debt held by government accounts) in the graphic below

Fiscal Year 2020Debt Held by the Public and Intragovernmental Debt

America's Fiscal Future - Federal Debt (1)

In which countries are the most Treasury securities held?


America's Fiscal Future - Federal Debt (2)

Click here for an interactive version of the map

Sources: Fiscal Year 2019 Financial Report(bar chart). GAO analysis of data from the Department of the Treasury, Schedules of Federal Debt and the Federal Reserve, Financial Accounts of the United States (pie charts). GAO analysis of data from the Department of the Treasury, the Federal Reserve Bank of New York, and the Board of Governors of the Federal Reserve System, Foreign Portfolio Holdings of U.S. Securities as of June 28, 2019 (map).

Notes: Countries highlighted on the map hold at least $1 billion in Treasury securities and together represent more than 99 percent of all foreign holdings. China refers to mainland China; Hong Kong and Macau are reported separately. Data on Treasury securities held by Serbia and Montenegro are reported together, totaling about $1.7 billion as of June 28, 2019 (map). The map does not include data for Treasury securities held by international and regional organizations, unknown countries, and countries for which Treasury did not report data.
Data: TXT | PDF

As shown in the graphic above, more than 75 percent of foreign holdings of Treasury securities can be attributed to 15 countries. China (excluding Hong Kong and Macau) and Japan have the largest holdings. However, this does not mean that residents of these countries are the ultimate owners. The data only identify where the securities are held. Obtaining accurate information on the actual foreign owners is often not possible, because chains of foreign financial intermediaries are often involved in the custody or management of these securities.

Managing the Debt

Treasury's overarching debt management goal is to ensure the federal government's financing needs are met at the lowest cost to taxpayers over time. To achieve this goal, Treasury issues a variety of marketable securities in sufficient amounts to ensure the liquidity of each, and maintains a regular and predictable auction schedule. This schedule provides investors with greater certainty and better information with which to plan their investments.

America's Fiscal Future - Federal Debt (3)

Why Debt Management Is Challenging

Constantly changing financial markets— Treasury must consider the volume of securities to be issued at a given maturity in relation to changing market demands for Treasury securities. If the Treasury offers too much of any given security, it may have to pay a higher yield to attract investors. If the Treasury offers too little of a given security, it may reduce the security's liquidity in the secondary market, which, in the long run, may also increase the yield Treasury has to pay.

Uncertain future borrowing needs— Policy changes and national economic performance are difficult to project and can quickly and substantially affect federal cash flow. For example, policy responses to external events like recessions, war, and emergencies (e.g., natural disasters such as hurricanes) can dramatically affect borrowing needs.

Uncertainty about the debt limit— The debt limit (the statutory ceiling on the amount of total federal debt) is suspended through July 2021, at which time it will need to be either suspended again or raised. Delays in suspending or raising the debt limit can create debt and cash management challenges for the Treasury. Treasury has often used extraordinary actions, such as suspending investments or temporarily disinvesting securities held in federal employee retirement funds, to remain under the limit. For more information about the debt limit, read our WatchBlog post, “Debt Limit 101.”

Refinancing the debt— As of September 30, 2020, 64 percent of the outstanding amount of marketable Treasury securities held by the public (about $13.1 trillion) was scheduled to mature in the next 4 years. A significant share of that maturing debt will need to be refinanced at prevailing interest rates. Treasury’s debt management goal is to borrow at the lowest cost over time, while also managing its debt portfolio to mitigate “rollover risk”—the risk that it may have to refinance its debt at higher interest rates. To do this, Treasury needs to consider the mix of longer-term and shorter-term securities that it offers. Longer-term securities typically have higher interest rates but provide more certainty, while shorter-term securities have lower interest rates but need to be refinanced more frequently.

America's Fiscal Future - Federal Debt (2024)


What is the future prediction for the US debt? ›

88% of them show borrowing on an unsustainable path. The US Treasury building in Washington, DC. The Congressional Budget Office warned in its latest projections that US federal government debt is on a path from 97% of GDP last year to 116% by 2034 — higher even than in World War II.

How much US debt is coming due in 2024? ›

Debt net of financial assets is expected to grow to $23,619 billion (89.7 percent of GDP) at the end of 2023 and $25,465 billion (93.5 percent of GDP) at the end of 2024. After 2024, debt net of financial assets is projected to continue to gradually increase, to 102.4 percent of GDP at the end of 2033.

What is the US fiscal debt? ›

The $34 trillion gross federal debt equals debt held by the public plus debt held by federal trust funds and other government accounts. In very basic terms, this can be thought of as debt that the government owes to others plus debt that it owes to itself. Learn more about different ways to measure our national debt.

What is the projected federal deficit in 2024? ›

Analysis: In February, the Congressional Budget Office released its annual Budget and Economic Outlook and projected that the nation will run a $1.6 trillion deficit in FY2024. The debt-to-GDP ratio is expected to increase from 99% in FY2024 to 116% in FY2035.

How high can the US debt go? ›

We estimate that the U.S. debt held by the public cannot exceed about 200 percent of GDP even under today's generally favorable market conditions.

Can America get out of debt? ›

Economists at the Penn Wharton Budget Model estimate that financial markets cannot sustain more than twenty additional years of deficits. At that point, they argue, no amount of tax increases or spending cuts would suffice to avert a devastating default.

Who does the US owe 34 trillion to? ›

The national debt is the total amount of money the U.S. owes its creditors, which includes “the public” (individual investors, businesses, commercial banks, pension funds, mutual funds, state and local governments, the Federal Reserve System and foreign governments) as well as other parts of the federal government, ...

How much is China in debt? ›

China: National debt from 2019 to 2029 (in billion U.S. dollars)
CharacteristicNational debt in billion U.S. dollars
7 more rows

Which country has the highest debt? ›

At the top is Japan, whose national debt has remained above 100% of its GDP for two decades, reaching 255% in 2023.

What country is the US most in debt to? ›

Nearly half of all US foreign-owned debt comes from five countries.
Country/territoryUS foreign-owned debt (January 2023)
United Kingdom$668,300,000,000
6 more rows

At what point is the national debt unsustainable? ›

US debt will become unsustainable and trigger default in about 20 years, if it stays on current path. US debt will become unsustainable in roughly 20 years if it doesn't change course, a Penn Wharton Budget Model determined.

Who owns most of the US debt? ›

The major international owners of US debt include Japan ($1.1T), China, UK, Belgium, Switzerland, Cayman Islands and smaller amounts from the rest of the world. After the recent weak treasury auction, US government officials warned that they are seeing waning demand from international buyers.

What will happen to US economy in 2024? ›

U.S. economy grew at 1.6 percent annual rate in first quarter 2024, a sharp slowdown. U.S. economic growth slowed in the first three months of the year, with gross domestic product growing at an annualized rate of 1.6 percent, as consumers began gradually pulling back.

How will the US economy be in 5 years? ›

Overall, despite an expected slowdown in the coming quarters, we expect the US economy to post real growth of 2.4% this year and 1.4% in 2025. Over the entire forecast, economic growth averages 1.8% per year, slightly higher than the long-term potential of 1.5% per year.

What is the projected budget deficit for fiscal year 2025? ›

Key Figures in the President's FY 2025 Budget
TrillionsPercent of GDP
Net Interest$12.2 trillion3.4%
Total Spending$86.6 trillion24.4%
Deficits$16.3 trillion4.6%
Debt (Final Year)$45.1 trillion106%
6 more rows
Mar 11, 2024

How much will the US debt be in 2025? ›

YearNational debt in billion U.S. dollars
8 more rows
Feb 29, 2024

Is the US debt getting better? ›

The national debt has increased every year over the past ten years. Interest expenses during this period have remained fairly stable due to low interest rates and investors' judgement that the U.S. Government has a very low risk of default.

Is the US debt going up or down? ›

15, 2023, and $32 trillion on June 15, 2023, hitting this accelerated pace. Before that, the $1 trillion move higher from $31 trillion took about eight months. U.S. debt, which is the amount of money the federal government borrows to cover operating expenses, now stands at nearly $34.4 trillion, as of Wednesday.

Who does the US owe money to? ›

Nearly half of all US foreign-owned debt comes from five countries.
Country/territoryUS foreign-owned debt (January 2023)
United Kingdom$668,300,000,000
6 more rows

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