The U.S. national debt is the total amount borrowed by the U.S. federal government to cover the budget deficit. This debt includes treasury bonds and other securities sold to domestic and foreign investors. As of July 2024, the U.S. national debt was approximately $35 trillion, equivalent to about 98% of GDP ¹.
*History of the U.S. National Debt:*
- The United States has been incurring debt since its inception, with debts incurred during the American Revolution in 1791 exceeding 75 million U.S. dollars.
- The debt continued to grow over the years, influenced by wars and economic downturns.
- In 1835, the debt began to shrink due to the sale of land owned by the federal government and budget cuts ².
*Reasons for the Growth of the U.S. National Debt:*
- *Budget Deficit*: When the government spends more than it earns, it creates a budget deficit.
- *Wars and Disasters*: Wars and disasters increase government spending and lead to an increase in debt.
- *Tax Cuts*: Tax cuts can lead to a decrease in government revenues and an increase in deficits ².
*Impact of the U.S. National Debt:*
- *Increase in Interest Rates*: An increase in national debt can lead to higher interest rates and negative effects on the economy.
- *Impact on Private Investments*: National debt can reduce private investments and have negative effects on economic growth ³.