National debt of the United States: Difference between revisions

{{update|discoveries since 2018; date=January 2018|date=March 2020}}

{{Use mdy dates|date=August 2011}}

Historically, the U.S. public debt as a share of [[gross domestic product]] (GDP) increases during wars and [[recession]]s and then subsequently declines. The [[Debt-to-GDP ratio|ratio of debt to GDP]] may decrease as a result of a government surplus or via [[Economic growth|growth of GDP]] and [[inflation]]. The [[Congressional Budget Office]] (CBO) estimated in February 2024 that Federal debt held by the public is projected to rise from 99 percent of GDP in 2024 to 116 percent in 2034, and would continue to grow if current laws generally remained unchanged. Over that period, the growth of interest costs and mandatory spending outpaces the growth of revenues and the economy, driving up debt. Those factors persist beyond 2034, pushing federal debt higher still, to 172 percent of GDP in 2054.<ref name="CBO_budgetOutlook2024">{{cite web|url=https://www.cbo.gov/publication/59710|title=The Budget and Economic Outlook: 2024 to 2034|publisher=CBO|date=February 7, 2024|access-date=February 7, 2024}}</ref> In recent decades, aging [[Demographics of the United States|demographics]] and rising [[Health care prices in the United States|healthcare costs]] have led to concern about the long-term sustainability of the federal government's [[Fiscal policy of the United States|fiscal policies]].<ref>{{Cite web |date=2022-07-27 |title=The 2022 Long-Term Budget Outlook |url=https://www.cbo.gov/publication/57971 |access-date=2022-09-30 |publisher=Congressional Budget Office |language=en}}</ref> The aggregate, gross amount that Treasury can borrow is limited by the [[United States debt ceiling]].<ref>About 0.8% of debt ($1009 billion) is not covered by the ceiling, per [https://fpc.state.gov/documents/organization/105193.pdf The Debt Limit: History and Recent Increases, p. 4. (Note: This includes pre-1917 debt)], fpc.state.gov; accessed August 22, 2016.</ref>

 

 

During the [[COVID-19 pandemic in the United States|COVID-19 pandemic]], the [[U.S. federal government response to the COVID-19 pandemic|federal government spent trillions]] in virus aid and economic relief. The [[Congressional Budget Office]] (CBO) estimated that the budget deficit for fiscal year 2020 would increase to $3.3&nbsp;trillion or 16% GDP, more than triple that of 2019 and the largest as % GDP since 1945.<ref name="CBO_Aug2020">{{Cite web| title = An update to the budget outlook 2020 to 2030 | access-date = September 6, 2020| date = September 2, 2020| url=https://www.cbo.gov/publication/56517}}</ref>

 

===Foreign holdings===

[[File:MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES.webp|thumb|right|290px|Foreign holders of Treasury Securities <br> April 2021 - April 2022]]

As of October 2018, foreigners owned $6.2&nbsp;trillion of U.S. debt, or approximately 39% of the debt held by the public of $16.1&nbsp;trillion and 28% of the total debt of $21.8&nbsp;trillion.<ref>{{cite web|url=http://www.treasurydirect.gov/govt/reports/pd/mspd/2014/opds092014.pdf|title=Treasury Direct-Monthly Statement of the Public Debt Held by the U.S.|date=September 2014|access-date=November 30, 2014}}</ref> In December 2020, foreigners held 33% ($7 trillion out of $21.6 trillion) of publicly held US debt; of this $7 trillion, $4.1 trillion (59.2%) belonged to foreign governments and $2.8 trillion (40.8%) to foreign investors. Including both private and public debt holders, the top three December 2020 national holders of American public debt are [[Japan]] ($1.2 trillion or 17.7%), [[China]] ($1.1 trillion or 15.2%), and the [[United Kingdom]] ($0.4 trillion or 6.2%).<ref>{{cite report |author2=Jared C. Nagel |author1=Marc Labonte |date=July 9, 2021 |title=Foreign Holdings of Federal Debt |url=https://fas.org/sgp/crs/misc/RS22331.pdf |publisher=[[Congressional Research Service]] |page=ii |access-date=July 21, 2021}}</ref>

[[File:U.S. Federal Net Interest as Pct GDP.png|thumb|right|upright=1.35|Interest to GDP, a measure of debt burden, was very low in 2015 but is projected to rise with both interest rates and debt levels over the 2016–2026 period.]]

[[File:2023 Interest on federal debt.png|thumb|300px|right|upright=1.6|2023 Interest on federal debt]]

 

The federal debt at the end of the 2018/19 fiscal year (ended September 30, 2019) was $22.7&nbsp;trillion (~${{Format price|{{Inflation|index=US-GDP|value=22700000000000|start_year=2018}}}} in {{Inflation/year|US-GDP}}). The portion that is held by the public was $16.8&nbsp;trillion. Neither figure includes approximately $2.5&nbsp;trillion owed to the government.<ref>{{Cite web|url=https://www.gao.gov/products/gao-20-117|title=Financial Audit: Bureau of the Fiscal Service's FY 2019 and FY 2018 Schedules of Federal Debt|first=U. S. Government Accountability|last=Office|website=www.gao.gov}}</ref> Interest on the debt was $404&nbsp;billion.<ref>https://www.gao.gov/assets/710/702591.pdf, https://www.gao.gov/assets/710/704983.pdf</ref>

|2023

|875.5<ref name=gao23>{{Cite web|title=Financial Audit: Bureau of the Fiscal Service's FY 2023 and FY 2022 Schedules of Federal Debt|url=https://www.gao.gov/assets/d24106340.pdf|access-date=2024-01-20|website=[[Government Accountability Office]]|language=en|date=2023-11-09}}</ref>

|678<ref name=gao23/>

|4439

|575<ref name=gao22>{{Cite web|title=Financial Audit: Bureau of the Fiscal Service's FY 2022 and FY 2021 Schedules of Federal Debt|url=https://www.gao.gov/products/gao-23-105586|access-date=2024-01-20|website=[[Government Accountability Office]]|language=en|date=2022-11-09}}</ref>

|612

|4047

|{{Round| {{#expr:100*612/4047}} |0}}%

|527<ref name=gao21/>

|517.7

|3421

|{{Round| {{#expr:100*517.7/3421}} |0}}%

|-

|2018

|571

|357<ref name=gao18/>

|-

|2016

|460

|273<ref name=gao16/>

|-

|2014

|442

|260<ref name=gao14/>

|-

|2012

|417

|245.4<ref name=gao12/>

|-

|2010

|399.5

|215<ref name=gao10/>

 

===Chinese holdings of U.S. debt===

 

A 2010 article by [[James K. Galbraith]] in ''[[The Nation]]'', defends deficits and dismisses concerns over foreign holdings of United States government debt denominated in U.S. dollars, including China's holdings.<ref name="james">: "...&nbsp;What about indebtedness to foreigners?&nbsp;... To acquire [U.S. gov't bonds], China must export goods to us, not offset by equivalent imports. That is a cost to China. It's a cost [[Government of China|Beijing]] is prepared to pay, for its own reasons: export industries promote learning, technology transfer and product quality improvement, and they provide jobs to migrants from the countryside. But that's China's business. For China, the bonds themselves are a sterile [[hoard]]. There is almost nothing that Beijing can do with them;&nbsp;... its stock of T-bonds will just go on growing. And we will pay interest on it, not with real effort but by typing numbers into computers. There is no burden associated with this; not now and not later." From [http://www.thenation.com/article/defense-deficits/ "In Defense of Deficits"] by [[James K. Galbraith]], ''[[The Nation]]'', March 4, 2010.</ref> In 2010, [[Warren Mosler]], wrote that "When[ever] the Chinese redeem those T-securities, the money is transferred back to China's checking account at the Fed. During the entire purchase and redemption process, the dollars never leave the Fed."<ref name="mosler">"...&nbsp;The Chinese buy U.S. T-securities by transferring U.S. dollars (not yuan) from their checking account at the Federal Reserve Bank to China's T-security account, also at the Federal Reserve Bank. When[ever] the Chinese redeem those T-securities, the money is transferred back to China's checking account at the Fed. During the entire purchase and redemption process, the dollars never leave the Fed." [http://moslereconomics.com/2010/09/23/what-policies-for-global-prosperity/ "What Policies for Global Prosperity?"] by [[Warren Mosler]], September 23, 2010.</ref> Australian economist [[Bill Mitchell (economist)|Bill Mitchell]] argued that the United States government had a "nearly infinite capacity...to spend."<ref name="mitchell">[[Bill Mitchell (economist)|Mitchell, Bill]], [[University of Newcastle (Australia)]]. [http://bilbo.economicoutlook.net/blog/?p=18813 "The nearly infinite capacity of the US government to spend"] (March 28, 2012); [http://bilbo.economicoutlook.net/blog/?p=25161 "The US government can buy as much of its own debt as it chooses"] (August 27, 2013)</ref> Against the backdrop of escalating Sino-U.S. tensions in 2020, Yuzo Sakai, a manager at Ueda Totan Forex Ltd., said that if China undertakes a massive sales of U.S. bonds, investors may flock to the [[Japanese yen]] as a safe-haven currency. Since 2018, China had been gradually decreasing its holdings of U.S. federal debt, bringing the total to $1.07 trillion in June 2020, behind Japan who became the biggest foreign creditor of the United States. Stephen Nagy, a professor at the [[International Christian University]], said a sell-off by China "might damage the United States in the short term" but also cause "critical economic instability" in the Chinese and global economy. [[Jeff Kingston]], a professor and director of Asian Studies at [[Temple University, Japan Campus|Temple University, Japan]], echoed the view, adding that dumping would lower the price of U.S. bonds, making it more attractive to other countries. According to an [[institutional investor]], however, it may be difficult for Japan to boost its already large holdings of U.S. government debt, as such a move could be seen as "currency manipulation".<ref>{{Cite web |last=Tachikawa |first=Tomoyuki |date=Aug 20, 2020 |title=Fears grow over China's possible massive sales of U.S. debt as weapon |url=https://english.kyodonews.net/news/2020/08/fb165250518a-focus-fears-grow-over-chinas-possible-massive-sales-of-us-debt-as-weapon.html |website=Kyodo News+}}</ref>

The [[COVID-19 pandemic in the United States]] impacted the economy significantly beginning in March 2020, as businesses were shut-down and furloughed or fired personnel. About 16&nbsp;million persons filed for [[Unemployment benefits|unemployment insurance]] in the three weeks ending April 9. It caused the number of unemployed persons to increase significantly, which is expected to reduce tax revenues while increasing [[automatic stabilizer]] spending for unemployment insurance and [[Supplemental Nutrition Assistance Program|nutritional support]]. As a result of the adverse economic impact, both state and federal budget deficits will dramatically increase, even before considering any new legislation.<ref>{{Cite news |last1=Cohen |first1=Patricia |last2=Hsu |first2=Tiffany |date=April 9, 2020 |title='Sudden Black Hole' for the Economy With Millions More Unemployed |newspaper=[[The New York Times]] |url=https://www.nytimes.com/2020/04/09/business/economy/unemployment-claim-numbers-coronavirus.html}}</ref>

 

 

CBO provided a preliminary score for the CARES Act on April 16, 2020, estimating that it would increase federal deficits by about $1.8&nbsp;trillion over the 2020-2030 period. The estimate includes:

The [[Committee for a Responsible Federal Budget]] estimated that the budget deficit for fiscal year 2020 would increase to a record $3.8&nbsp;trillion (~${{Format price|{{Inflation|index=US-GDP|value=3800000000000|start_year=2020}}}} in {{Inflation/year|US-GDP}}), or 18.7% GDP.<ref name="CRFB_CARES1">{{Cite web |title=NYT-Reuters-U.S. Deficit to Soar to Record $3.8 Trillion in 2020, Budget Watchdog Group Says-April 13, 2020 |url=https://www.nytimes.com/reuters/2020/04/13/us/13reuters-health-coronavirus-usa-budget.html |website=[[The New York Times]]}}</ref> For scale, in 2009 the budget deficit reached 9.8% GDP ($1.4&nbsp;trillion nominal dollars) in the depths of the [[Great Recession]]. CBO forecast in January 2020 that the budget deficit in FY2020 would be $1.0&nbsp;trillion (~${{Format price|{{Inflation|index=US-GDP|value=1000000000000|start_year=2020}}}} in {{Inflation/year|US-GDP}}), prior to considering the impact of the COVID-19 pandemic or CARES.<ref>{{Cite web |date=January 28, 2020 |title=The Budget and Economic Outlook: 2020 to 2030 &#124; Congressional Budget Office |url=https://www.cbo.gov/publication/56020 |website=www.cbo.gov}}</ref> CFRB further estimated that the national debt would reach 106% of U.S. GDP in September 2020, a record since the aftermath of World War II.<ref>{{cite news |last1=Lynch |first1=David J. |date=18 April 2020 |title=Record government and corporate debt risks 'tipping point' after pandemic passes |language=en |newspaper=[[The Washington Post]] |url=https://www.washingtonpost.com/us-policy/2020/04/18/record-government-corporate-debt-risk-tipping-point-after-pandemic-passes/ |access-date=19 April 2020}}</ref>

 

 

==Appendix==

 

===Interest paid===

Note that this is all interest the U.S. paid, including interest credited to Social Security and other government trust funds, not just "interest on debt" frequently cited elsewhere.

[[File:Federal interest payments 2023.webp|thumb|350px|Federal interest payments <br> Quarterly data annualized]]

===Foreign holders of U.S. Treasury securities===

{{main|United States Treasury security#International}}

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'''¹'''China, Hong Kong, India, Indonesia, Korea, Malaysia, the Philippines, Singapore and Thailand