Congress Just Lifted The Debt Ceiling Yet Again: What Even Is National Debt? Does It Matter?

Yes, It Does. But It’s More The Actual Interest Payments On The Debt, Equal To $360B, That Are Squeezing The Current Budget.

Photo Credit/CNBC

What Is U.S. National Debt?

This is simply debt the U.S Government has borrowed and in theory needs to pay back. There are two types of national debt:

Who Holds National Debt?

The below pie chart is a pretty good break down of who holds U.S. debt: American investors hold the most, followed closely by foreign investors, rounded out by the U.S. government (intra-governmental debt) and the Federal Reserve.

MarketWatch/U.S. Treasury
SIFMA/Federal Reserve

How Did We Get Here?

In 1929, according to The Balance, debt was $17 billion, or 16 percent of gross domestic product. In 2000, total debt was roughly $5.8 trillion, or about 55 percent GDP. During George W. Bush’s two terms, debt essentially doubled, rising to about 83 percent GDP. President Barack Obama continued the trend, adding another $8.6 trillion. President Donald Trump has followed his two predecessors, adding about $2 trillion to the national debt since he took office. Here is a chart detailing the debt growth from 2000 (in billions).

The Balance

Does Debt Matter Right Now?

Yes, it does.

Will The U.S. Ever Default On It’s Debt?

The U.S. could default on its debt if Congress does not continually raise the debt ceiling, which is the amount of money the government is allowed to borrow.

The Balance

What Would Happen If The U.S. Defaulted?

It’s honestly tough to say. As Scotty Henderson in the Big Think points out:

Can The Debt Be Reduced?

This is a tough proposition considering debt is rising sharply everyday, and the fact that the U.S. has been spending more than it makes in revenue every year since 2002.

Writing about banks, stocks, and startups. Frequently published in The Motley Fool and Rhode Island Inno. Co-founder of The Buzz.

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