The National Debt Is Now More than $34 Trillion. What Does That Mean? (2024)

Jan 2, 2024

The gross federal debt of the United States has surpassed $34,000,000,000,000. Although the debt affects each of us, it may be difficult to put such a large number into perspective and fully understand its implications. The infographic below offers different ways of looking at the debt and its relationship to the economy, the budget, and American families.

The $34 trillion gross federal debt includes debt held by the public as well as 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.

America’s high and rising debt matters because it threatens our economic future. The coronavirus pandemic rapidly accelerated our fiscal challenges, but we were already on an unsustainable path, with structural drivers that existed long before the pandemic. Putting our nation on a better fiscal path will help ensure a stronger and more resilient economy for the future.

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The National Debt Is Now More than $34 Trillion. What Does That Mean? (2024)

FAQs

The National Debt Is Now More than $34 Trillion. What Does That Mean? ›

The $34 trillion gross federal debt includes debt held by the public as well as 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.

What happens when national debt is high? ›

Rising debt reduces business investment and slows economic growth. It also increases expectations of higher rates of inflation and erosion of confidence in the U.S. dollar.

Why is the US $34 trillion in debt? ›

Tax cuts, stimulus programs, increased government spending, and decreased tax revenue caused by widespread unemployment generally account for sharp rises in the national debt. Comparing a country's debt to its gross domestic product (GDP) reveals the country's ability to pay down its debt.

Do we need to worry about the national debt? ›

He said debt is an important tool for a country, and its importance is why we should be so concerned. Cochrane points out that during the Great Recession and the COVID-19 shutdown, the United States was able to swoop in fast with billions for bailouts, stimulus checks and aid programs.

What is the national debt explained? ›

The term "national debt" refers to the outstanding financial obligation of a country. The national debt is what the federal government owes its creditors. It's made up of different types of debt, such as that which is held by the public and federal government trust funds.

Can the US get out of debt? ›

Under current policy, the United States has about 20 years for corrective action after which no amount of future tax increases or spending cuts could avoid the government defaulting on its debt whether explicitly or implicitly (i.e., debt monetization producing significant inflation).

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)
Japan$1,104,400,000,000
China$859,400,000,000
United Kingdom$668,300,000,000
Belgium$331,100,000,000
6 more rows

Who owns the national debt? ›

Of that amount, about $24.5 trillion, or 78 percent, was debt held by the public — representing cash borrowed from domestic and foreign investors. The remaining $7.0 trillion (22 percent), was intragovernmental debt, which simply records transactions between one part of the federal government and another.

Who has the most debt on earth? ›

The United States has the world's highest national debt with $30.1 trillion owed to creditors as of the first quarter of 2023. Washington's debt now stands at $31.4 trillion, raising further concerns about US government spending and borrowing costs.

Why is the US so heavily in debt? ›

Costly wars proved to be a theme in our nation's history. The debt was at $49 billion right before the U.S. entered World War II. When the war ended, it was $260 billion. It began rising at a fast rate in the 1980's and was accelerated through events like the Iraq Wars and the 2008 Great Recession.

Why doesn't the US pay off its debt? ›

Why Is the U.S. Debt So High? Essentially, because the government repeatedly spends more money than it receives in tax revenue. Many point to tax cuts passed by Congress as the major culprit for decreasing this income. Others point to out-of-control, politically-driven spending as the reason.

Which country has no debt? ›

1) Switzerland

Switzerland is a country that, in practically all economic and social metrics, is an example to follow. With a population of almost 9 million people, Switzerland has no natural resources of its own, no access to the sea, and virtually no public debt.

How serious is the US national debt? ›

For several years, the nation's debt has been bigger than its gross domestic product, which was $26.13 trillion in the fourth quarter of 2022. Debt-to-GDP is a useful metric for analyzing the debt over long time spans, as it puts the debt into relative terms by comparing it against the size of the national economy.

Does China owe the US money? ›

Foreign countries buy US Treasury securities since they are considered as one of the most secure assets. Among other countries, Japan and China have continued to be the top owners of US debt during the last two decades.

How much is China in debt? ›

In 2023, aggregate local government debt had risen to 92 trillion yuan ($12.58 trillion) and the central government of People's Republic of China ordered its banks to roll over debts in a debt-restructuring. China's gross external debt in 2023 was $2.38 trillion.

Does China have debt? ›

In addition, household debt - mostly mortgages - is 61 per cent of GDP. Altogether, China's gross national debt is over 300 percent of GDP. A high debt burden constrains the government's fiscal firepower, preventing it from unleashing bolder stimulus and weakening its effectiveness when implementing support measures.

What is one disadvantage of a high national debt? ›

Disadvantages of a large national debt.

Reduced national income and savings levels- a large portion of the national income collected is used in loan and interest repayments reducing the amount available for investment purposes.

Is high national debt a problem for future growth? ›

The growing debt could create additional challenges for federal fiscal management, which could in turn cause challenges for American households and individuals, too. These potential challenges include: Risks to economic growth and lower investment in the private sector.

What is one of the major problems caused by a large national debt? ›

During the Great Depression, why did people begin to question classical economics? It could not say how long the market would take to return to equilibrium. What is one of the major problems caused by a large national debt? It decreases the amount of money available to be borrowed by businesses.

What 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.

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