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)


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

“If the government starts pumping out a lot of debt, interest rates are going to rise, and then your mortgage rate is going to rise as well,” Andolfatto said. Another concern is that as the debt and interest keep growing, the government will cut funding to programs like Social Security and Medicare.

What happens when the national debt gets too 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.

Why is the US 34 trillion in debt? ›

The biggest contributor to national debt, along with years of elevated budget deficits and colossal federal spending during the pandemic, is spending on national emergencies, like major wars and rising healthcare costs, according to Krosby.

How serious is the US national debt? ›

Debt-to-GDP Ratio

The $34 trillion is also bigger than our own economy. The United States' gross domestic product, or GDP, which is the sum total of all the goods and services we produce in a year, is about is about $27 trillion.

Should we worry about the national debt? ›

Equally alarming to many experts is the debt's unsustainable trajectory, as spending is projected to continue outpacing revenues under current law. Roger W. Ferguson Jr. Today, the national debt is almost the same size as the entire U.S. economy, and the debt is on track to double within the next thirty years.

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.

Who does the US owe money to? ›

Nearly half of all US foreign-owned debt comes from five countries.
Country/territoryUS foreign-owned debt (January 2023)
United Kingdom$668,300,000,000
6 more rows

Who has the most debt on earth? ›

United States. The United States boasts both the world's biggest national debt in terms of dollar amount and its largest economy, which resolves to a debt-to GDP ratio of approximately 128.13%.

Why is the US so heavily in debt? ›

It began rising at a fast rate in the 1980's and was accelerated through events like the Iraq Wars and the 2008 Great Recession. Most recently, the debt made another big jump thanks to the pandemic with the federal government spending significantly more than it took in to keep the country running.

Why is the US allowed to have so much debt? ›

The national debt enables the federal government to pay for important programs and services even if it does not have funds immediately available, often due to a decrease in revenue. Decreases in federal revenue coupled with increased government spending further increases the deficit.

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 has the worst national debt? ›

At the top is Japan, whose national debt has remained above 100% of its GDP for two decades, reaching 255% in 2023.

Will we ever have to pay the national debt? ›

The current US debt is approximately $23 trillion. It will never be paid off completely.

How bad is U.S. debt compared to the world? ›

The United States has the world's highest national debt at $31.4 trillion. Global debt currently stands at $305 trillion, $45 trillion higher than before the COVID-19 pandemic, according to the Institute of International Finance (IIF) – a global association of the financial industry.

What are two ways that the United States can cut the national debt? ›

Of course, just as with an individual or family, cutting spending and increasing revenue are smart first steps. Beyond that, the government considers things like new taxes, a higher retirement age, removing loopholes from the tax code, and more to reduce annual deficits and the national debt.

What is the problem with too much debt? ›

Holding too much debt can cause financial hardship in several ways. You may struggle to pay your bills, or your credit score could suffer making it more difficult to qualify for more loans like mortgages or auto loans.

Why is national debt so bad? ›

History shows the debt-to-GDP ratio tends to rise during recessions and in their aftermath. GDP shrinks during a recession while government tax receipts decline and safety net spending rises. The combination of higher budget deficits with lower GDP inflates the debt-to-GDP ratio.

What are some of the negatives of having a large national debt? ›

The Fiscal & Economic Impact
  • Reduced Public Investment. ...
  • Reduced Private Investment. ...
  • Fewer Economic Opportunities for Americans. ...
  • Greater Risk of a Fiscal Crisis. ...
  • Challenges to National Security. ...
  • Imperiling the Safety Net.

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.


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