America's Fiscal Future - Federal Debt (2024)

Understanding the Debt

When the federal government runs a deficit, the Department of the Treasury borrows money to make up the difference between spending and revenue. Then, if special funds like the Medicare trust fund have surpluses, the “extra” revenue is lent to the rest of the federal government.

The federal debt is the total amount of money that the federal government owes, either to its investors or to itself. Total federal debt rose to $26.9 trillion at the end of fiscal year 2020.

Federal Borrowing

How the Federal Government Borrows Money

The federal government borrows money from the public by issuing securities—bills, notes, and bonds—through the Treasury. Treasury securities are attractive to investors because they are:

  • Backed by the full faith and credit of the United States government
  • Offered in a wide range of maturities
  • Exempt from state and local taxes
  • Mostly marketable, meaning they can be resold in the financial market (a small portion are nonmarketable and can’t be resold, like U.S. Savings Bonds).

Investors can easily trade Treasury securities because there are many people interested in buying and selling them at any given time. Investors are willing to pay more for this safety and liquidity—leading to lower borrowing costs (interest on the debt) for the government.

You can see a breakdown of these investors and holders of intragovernmental debt (debt held by government accounts) in the graphic below

Fiscal Year 2020Debt Held by the Public and Intragovernmental Debt

America's Fiscal Future - Federal Debt (1)

In which countries are the most Treasury securities held?


America's Fiscal Future - Federal Debt (2)

Click here for an interactive version of the map

Sources: Fiscal Year 2019 Financial Report(bar chart). GAO analysis of data from the Department of the Treasury, Schedules of Federal Debt and the Federal Reserve, Financial Accounts of the United States (pie charts). GAO analysis of data from the Department of the Treasury, the Federal Reserve Bank of New York, and the Board of Governors of the Federal Reserve System, Foreign Portfolio Holdings of U.S. Securities as of June 28, 2019 (map).

Notes: Countries highlighted on the map hold at least $1 billion in Treasury securities and together represent more than 99 percent of all foreign holdings. China refers to mainland China; Hong Kong and Macau are reported separately. Data on Treasury securities held by Serbia and Montenegro are reported together, totaling about $1.7 billion as of June 28, 2019 (map). The map does not include data for Treasury securities held by international and regional organizations, unknown countries, and countries for which Treasury did not report data.
Data: TXT | PDF

As shown in the graphic above, more than 75 percent of foreign holdings of Treasury securities can be attributed to 15 countries. China (excluding Hong Kong and Macau) and Japan have the largest holdings. However, this does not mean that residents of these countries are the ultimate owners. The data only identify where the securities are held. Obtaining accurate information on the actual foreign owners is often not possible, because chains of foreign financial intermediaries are often involved in the custody or management of these securities.

Managing the Debt

Treasury's overarching debt management goal is to ensure the federal government's financing needs are met at the lowest cost to taxpayers over time. To achieve this goal, Treasury issues a variety of marketable securities in sufficient amounts to ensure the liquidity of each, and maintains a regular and predictable auction schedule. This schedule provides investors with greater certainty and better information with which to plan their investments.

America's Fiscal Future - Federal Debt (3)

Why Debt Management Is Challenging

Constantly changing financial markets— Treasury must consider the volume of securities to be issued at a given maturity in relation to changing market demands for Treasury securities. If the Treasury offers too much of any given security, it may have to pay a higher yield to attract investors. If the Treasury offers too little of a given security, it may reduce the security's liquidity in the secondary market, which, in the long run, may also increase the yield Treasury has to pay.

Uncertain future borrowing needs— Policy changes and national economic performance are difficult to project and can quickly and substantially affect federal cash flow. For example, policy responses to external events like recessions, war, and emergencies (e.g., natural disasters such as hurricanes) can dramatically affect borrowing needs.

Uncertainty about the debt limit— The debt limit (the statutory ceiling on the amount of total federal debt) is suspended through July 2021, at which time it will need to be either suspended again or raised. Delays in suspending or raising the debt limit can create debt and cash management challenges for the Treasury. Treasury has often used extraordinary actions, such as suspending investments or temporarily disinvesting securities held in federal employee retirement funds, to remain under the limit. For more information about the debt limit, read our WatchBlog post, “Debt Limit 101.”

Refinancing the debt— As of September 30, 2020, 64 percent of the outstanding amount of marketable Treasury securities held by the public (about $13.1 trillion) was scheduled to mature in the next 4 years. A significant share of that maturing debt will need to be refinanced at prevailing interest rates. Treasury’s debt management goal is to borrow at the lowest cost over time, while also managing its debt portfolio to mitigate “rollover risk”—the risk that it may have to refinance its debt at higher interest rates. To do this, Treasury needs to consider the mix of longer-term and shorter-term securities that it offers. Longer-term securities typically have higher interest rates but provide more certainty, while shorter-term securities have lower interest rates but need to be refinanced more frequently.

America's Fiscal Future - Federal Debt (2024)


What is the future prediction for the US debt? ›

The Congressional Budget Office warned in its latest projections that US federal government debt is on a path from 97% of GDP last year to 116% by 2034 — higher even than in World War II.

How much US debt will mature in 2024? ›

A record $8.9 trillion of government debt will mature over the next year, see the first chart below. The government budget deficit in 2024 will be $1.4 trillion according to the CBO, and the Fed has been running down its balance sheet by $60 billion per month.

Is the United States in financial trouble? ›

The outlook from the U.S. Government Accountability office (GAO) isn't much better. A report released last month said the government is facing an “unsustainable” fiscal path that poses a “serious” threat to economic, security, and social issues if unaddressed.

Is growing US debt a problem? ›

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.

At what point will US debt become unsustainable? ›

Summary: PWBM estimates that---even under myopic expectations---financial markets cannot sustain more than the next 20 years of accumulated deficits projected under current U.S. fiscal policy.

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.

How much does the US owe China? ›

U.S. Debt FAQs

The United States currently owes China around $775 billion as of 2024. However, China does not disclose how much debt the U.S. owes them.

Who has the most debt in the world? ›

At the top is Japan, whose national debt has remained above 100% of its GDP for two decades, reaching 255% in 2023. *For the U.S. and Canada, gross debt levels were adjusted to exclude unfunded pension liabilities of government employees' defined-benefit pension plans.

How much is China in debt? ›

In 2023, aggregate local government debt had risen to 92 trillion yuan ($12.58 trillion) and the central government of People's Republic of China ordered its banks to roll over debts in a debt-restructuring. China's gross external debt in 2023 was $2.38 trillion.

Are we in a depression right now? ›

The American economy is not in a silent depression. It's not even in a depression at all,” House said. “When we came into 2023, many economists thought we might slide into a recession over the course of the year, but growth in goods and services and in trade have all remained far stronger than we anticipated.”

How long would it take to pay off the national debt? ›

Our $16 trillion debt could be paid off in a year. But in order for that to happen, the government would have to stop spending completely and raise taxes at least 10% across the board. The money generated would go directly to paying down the debt.

What was the worst financial crisis in the US history? ›

The Great Depression of 1929–39

Encyclopædia Britannica, Inc. This was the worst financial and economic disaster of the 20th century. Many believe that the Great Depression was triggered by the Wall Street crash of 1929 and later exacerbated by the poor policy decisions of the U.S. government.

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 in such bad debt? ›

Every year since 2001, the U.S. government has spent more money than it takes in, which means it has to borrow money to make up for the difference. “Debt has many useful purposes,” said Kris Mitchener, professor of economics at the Leavey School of Business at Santa Clara University.

What is the biggest cause of US debt? ›

Nearly every year, the government spends more than it collects in taxes and other revenue, resulting in a deficit. (The debt ceiling, set by Congress, caps how much the U.S. can borrow to pay for its remaining bills.) The national debt, now at a historic high, is the buildup of its deficits over time.

How much will the US debt be in 2025? ›

YearNational debt in billion U.S. dollars
8 more rows
Feb 29, 2024

What is the projected US debt in 2030? ›

Because of the large deficits, federal debt held by the public is projected to grow, from 81 percent of GDP in 2020 to 98 percent in 2030 (its highest percentage since 1946). By 2050, debt would be 180 percent of GDP—far higher than it has ever been (see Chapter 1).

How high can the US debt go? ›

Unless current revenue and spending policies change, by 2028 debt will reach its historical high of 106 percent of GDP, according to our simulation. If unaddressed, it will grow more than twice as fast as the economy and reach 200 percent of GDP by 2050.

How much debt will the US be in 10 years? ›

Congressional Budget Office projections released on Wednesday said a growing economy and recent spending cuts had slowed deficits.


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