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The U.S. National Debt is the total money the federal government owes to various creditors, including individuals, companies, foreign governments, and even parts of itself like Social Security trust funds. It results from the government spending more than it earns in taxes and borrowing to make up the difference.

The national debt is likely hovering around or exceeding $36 trillion, based on its trajectory in recent years—it crossed $34 trillion in early 2024. The exact figure fluctuates daily due to new borrowing, interest payments, and economic conditions, but you can think of it as a massive IOU that’s grown over decades.

The government borrows by issuing Treasury securities—bonds, bills, and notes—that investors, including banks, pension funds, and foreign countries like Japan and China, purchase. A significant portion (around $7-8 trillion) is “intragovernmental debt,” where one part of the government owes another, such as loans from Social Security surpluses.

The debt increases due to budget deficits: when yearly spending exceeds income. For instance, in fiscal year 2023, the deficit was about $1.7 trillion, mainly due to expenses for defense, healthcare (Medicare/Medicaid), and interest on existing debt, along with lower tax revenue. Deficits usually rise during crises—like wars, economic downturns, or pandemics—as seen with the over $3 trillion deficits for COVID-19 relief in 2020-2021.

Breaking It Down

• Debt-to-GDP Ratio: A key metric. It’s over 120% of GDP (around $28 trillion), meaning the debt is greater than the economy’s annual output. For context, it was 35% in 1980, 60% in 2000, and increased after the 2008 financial crisis and the 2020 pandemic.
• Interest Costs: The government pays interest on its debt, and rising rates have made this more expensive. In 2023, interest payments reached about $660 billion a year—more than the defense budget—and could exceed $1 trillion if rates remain high or debt increases.
• Public vs. Total Debt: The “public debt” (owed to outside creditors) is about 75% of the total. The rest is that intragovernmental piece.

Pros: Borrowing allows the government to pay for essential projects—like roads and stimulus—without raising taxes right away. It has helped keep the U.S. economy stable, as the dollar’s status as a global reserve currency makes Treasuries a reliable investment.

Cons: Critics say it’s unsustainable. If interest costs eat up too much of the budget, it squeezes out other priorities. Plus, future generations inherit the tab. Some warn of a tipping point where creditors lose faith, though that’s debated since the U.S. can print dollars (unlike, say, Greece).

Hawks: “We’re drowning in debt! Cut spending or hike taxes now!”

Doves: “Relax, low rates and dollar dominance mean we can handle it. Focus on growth.”

Reality: Congress keeps kicking the can, raising the debt ceiling (119 times since 1944) rather than solving it. Last big standoff was 2023; next one’s brewing.

In short, the national debt is a giant, complex machine—part lifeline, part ticking clock. It’s not “good” or “bad” in isolation; it’s about how it’s managed. It must be dealt with sooner than later. What would happen to you if the country went bankrupt?