The National Debt is money owed by the government by different means, like foreign governments, investors, and federal governments.
The National Debt also includes intragovernmental holdings, in which the money is borrowed by the trust funds to pay government programs like Medicare and social security.
If taxable income is less than the money which the federal government spends, then we are going through the National Debt.
However, if taxable income is less than the money which has been the federal government spent, then we are going through the national debt.
When the revenue of the Government is greater than the spending, the government can use the surplus to pay back the national debt.
In this article, we will share some mind-blowing facts about National Debt that you might be interested in knowing. Let’s get started!
1. America Has The Highest National Debt To GDP Ratio
The National Debt of the United States represents 127% of the GDP, the 20th highest ratio in the world. In 2017, the U.S debt-to-GDP ratio was ranked 43rd out of 207 countries.
In 2020 and 2021, the spending on the effects of Covid-19 also contributed to the rise of the debt-to-GDP ratio.
Ideally, the debt to GDP ratio should not be higher than 77%, but some countries such as Italy, Japan, Venezuela, and Greece have an even greater debt-to-GDP ratio than the United States.
2. The Current Federal Debt Of The U.S has Surpassed $30 trillion
According to the Treasury Department’s Monthly Reckoning, the gross federal debt surpassed $30 trillion on 31st January 2022. The Federal debt includes debt held by the Federal trusts and public accounts and can be defined as the debt government owes to others plus debt it owes to itself.
3. Debt Per U.S Citizen Is More than $91,000
As we’ve mentioned earlier, the current national debt is over $30 trillion. So, by dividing the amount among the citizens living in the U.S, we get the debt rate per person, which is more than $91,703 for every single person in the United States, which is one of the highest national debts per person in the world.
4. The U.S Government Has Paid $522 Billion Interest on the National Debt 2020
As per data from U.S Treasury, in May 2021, the average interest rate on the national debt was 1.65%, a lot less from 2020, when the interest rate was 1.93%.
These figures show that the United States paid around $522 billion in the name of interest, and even a lot more in 2019, amounting to $574 billion.
5. The National Debt Increased 186% In The 1980s
When Ronald Regan took over in 1981, he increased the national debt by 186%. Regan inherited the $997 billion national debt and increased it by 10 to 20% annually.
In 1984, the national debt was approximately $1 trillion, and at the end of his term, the national debt was around $2.6 trillion, more than doubled the debt he inherited.
Also Read: What Is Debt Ceiling?
6. More than $6.5 Trillion Of the National Debt Is Intragovernmental
As of February 2022, more than $6.5 trillion of the U.S national debt is intragovernmental. It is owed by Treasury to federal agencies that invest in U.S treasury bonds.
The federal trusts and agencies that own the national debt are the Military Retirement fund, The Social Security Trust Fund, The Office of Personnel Management Retirement, and the Federal Disability Insurance Trust Fund.
7. Public Owes 78% Of The National Debt
The public holds more than $22 trillion of the United States National debt. A substantial portion of the public debt is held by governments, while the rest is owed by individuals, investors, banks, federal reserve, state and local agencies, and foreign countries, which represents the public debt and makes 78% of the total debt.
8. National Debt Ceiling Has Been Suspended Six Times
The debt ceiling is the limit imposed by Congress on how much national debt the government can carry at any given time.
When the ceiling limit is reached, the U.S Treasury department stops issuing any more bonds, Treasury bills, or notes.
Since 2013, the debt ceiling has been suspended six times to afford the financial obligations, such as military salaries, social security, healthcare, and interest on the national debt, or the U.S would have defaulted on its debt, and the economy would suffer severely.
9. China And Japan Own The Most U.S Debt
America’s largest foreign debt holders are China and Japan. China used to own the highest number of United States federal Debt, but in 2019, Japan bought more than $20 billion in U.S foreign debt, making it the largest foreign debt holder.
The biggest reason why foreign countries buy U.S debt is that dollar is the most popular foreign currency.
And having international reserves in foreign currency is beneficial to any country’s economy.
10. George Bush Increased The National Debt By $5 trillion
When George Bush took office in 2001, he inherited a national debt of %5.6 trillion.
After the 9/11 attacks, he launched a war on terror and financed the wars in Afghanistan and Iraq.
Besides, he fought two economic recessions and lowered taxes to boost economic growth, which significantly increased the national deficit.
11. Barack Obama Added Over $19 Trillion To The National Debt
Obama added the highest amount to the United States national debt during his presidential term. He fought the war on terror and the Great Recession of 2008.
He signed the American Recovery and Reinvestment Act of 2009 and spent around $800 billion on the economy.
At the end of the fiscal year 2016, the outstanding debt of America increased to $19.9 trillion.
12. Donald Trump Increased The Debt by $7.8 trillion
Donald Trump took charge on 20th January 2017, and during his first month, the federal debt went up to $19.9 trillion.
In December 2020, the total outstanding debt was $27.75 trillion. Besides, Trump also suspended the debt limit until July 2021, which increased the national debt even more.
Amit Gupta is the founder of National Planning Cycles, a company that helps startups, individuals, and small businesses with their financial planning. He has a vast amount of experience in the finance sector, having managed Google Play accounts for some of the world’s most successful unicorns. Amit is an expert in his field, and he uses his knowledge to help others achieve their individual goals.