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)

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

Higher levels of debt through cutting taxes or government spending could put more money in consumers' pockets, prompting them to spend more. This could cause the inflation rates to swell, according to Andolfatto. “Generally, economists think that when households feel wealthier, they're likely to spend more,” he said.

What happens when national debt is high? ›

A nation saddled with debt will have less to invest in its own future. Rising debt means fewer economic opportunities for Americans. 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.

Is the US in debt to $34 trillion? ›

The nation's debt, currently over $34 trillion, is rampantly growing as U.S. lawmakers have been unable to agree to long-term budget reforms that could tame it. Officials from several institutions warn a tipping point is near and it will only get worse if it snowballs into a crisis.

What happens if the national debt becomes too large? ›

Decreased savings and income

The private sector will stop seeking investments that can generate growth due to the incentive to save. This includes the lower amount of capital available once individuals stop investing in securities offered by businesses due to treasury securities being more attractive.

Why are we currently $30 trillion in debt? ›

The debt stems from the federal government spending more than it collects in revenue, which results in an annual deficit. The debt is an accumulation of those deficits. In the last 50 years, the government has only run a surplus five times, most recently in fiscal year 2001, according to the Treasury Department.

Who is national debt owed to? ›

There are two kinds of national debt: intragovernmental and public. Intragovernmental is debt held by the Federal Reserve and Social Security and other government agencies. Public debt is held by the public: individual investors, institutions, foreign governments.

Should we worry about the national debt? ›

The first rule of debt crises

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 country owns most of the United States debt? ›

  1. Japan. Japan held $1.15 trillion in Treasury securities as of January 2024, beating out China as the largest foreign holder of U.S. debt. ...
  2. China. China gets a lot of attention for holding a big chunk of the U.S. government's debt. ...
  3. The United Kingdom. ...
  4. Luxembourg. ...
  5. Canada.

How serious is the US national debt? ›

Years of elevated budget deficits, exacerbated by massive federal spending during the COVID-19 pandemic, have taken the debt to historic levels: totaling more than $26 trillion in 2023, U.S. federal government debt is now at its highest percentage of gross domestic product (GDP) since World War II.

How much does the US owe itself? ›

The remaining debt, which totals about $6.83 trillion, can be classified as intragovernmental holdings. This is basically debt the government owes itself.

Can a country refuse to pay its debt? ›

Key Takeaways. Sovereign defaults happen when a nation can't pay its bills or repay its debt obligations, which technically makes it bankrupt. The prospect of sovereign default is scary for investors, but many countries have never defaulted on their debts.

How can the US get out of debt? ›

Tax hikes alone are rarely enough to stimulate the economy and pay down debt. Governments often issue debt in the form of bonds to raise money. Spending cuts and tax hikes combined have helped lower the deficit. Bailouts and debt defaults have disadvantages but can help a government solve a debt problem.

How much does the US owe China? ›

China is one of the United States's largest creditors, owning about $859.4 billion in U.S. debt.1 However, it does not own the most U.S. debt of any foreign country. Nations borrowing from each other may be as old as the concept of money.

Who owes the US money? ›

Among other countries, Japan and China have continued to be the top owners of US debt during the last two decades. Since the dollar is a strong currency that is accepted globally, holding a substantial amount of US debt can be beneficial.

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.

Which person has the most debt on earth? ›

Former financial arbitrage trader Jerome Kerviel is the most indebted man on the planet, owing his former employer $6.3 billion. The amount Kerviel owes to French bank Societe Generale for fraudulent trades made in 2007 and 2008 would make Kerviel one of the 50 richest people in America if those debts were assets.

How could the US get out of debt? ›

Interest Rates. Maintaining interest rates at low levels can help stimulate the economy, generate tax revenue, and, ultimately, reduce the national debt. Lower interest rates make it easier for individuals and businesses to borrow money for goods and services, which creates jobs and increases tax revenues.

What are the negative impacts of debt? ›

Potential impacts of money and debt stress

There's a strong link between debt and poor mental health. People with debt are more likely to face common mental health issues, such as prolonged stress, depression, and anxiety. Debt can affect your physical well-being, too.

What causes national debt to be so high? ›

One of the main culprits is consistently overspending. When the federal government spends more than its budget, it creates a deficit. In the fiscal year of 2023, it spent about $381 billion more than it collected in revenues. To pay that deficit, the government borrows money.

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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