The national debt of the United States, known by the term U.S. National Debt, is one of the most relevant and debated topics in the global economic landscape. This article aims to present a professional and clear view of what this debt is, its origins, its economic implications, and the challenges it represents for the future of the country and the international financial system.
What is the U.S. National Debt?
The national debt of the United States is the total accumulated amount of all annual federal budget deficits, excluding surpluses. Simply put, it is how much the federal government owes to domestic and foreign creditors for having spent more than it collected in taxes and other revenues over the years.
It is divided into two main parts:
Public Debt: The portion that is held by private investors, foreign governments, and financial institutions.
Intragovernmental Debt: The portion of the debt that the federal government owes to itself, such as social security funds and retirement programs.
Historical Evolution
U.S. debt has grown significantly since the country's founding, but it has seen marked jumps during times of war, economic crisis, or large fiscal stimulus packages. Historical examples include:
World War II: The debt peaked relative to GDP to finance war efforts.
2008 Financial Crisis: The government increased spending to rescue the banking system and stimulate the economy.
COVID-19 Pandemic (2020-2021): New stimulus packages and emergency aid drastically raised borrowing.
In 2024, the debt surpassed $34 trillion, representing over 120% of the country's Gross Domestic Product (GDP) — a historic milestone that reignited the debate on fiscal sustainability.
Who Finances the Debt?
U.S. debt securities are considered one of the safest investments in the world. They are acquired by:
Institutional investors (banks, pension funds, insurance companies)
American citizens, through Treasury bonds
Foreign governments, such as China and Japan, that are major holders
The government itself, through its trust funds
Risks and Consequences
Although the U.S. has the privilege of issuing the global reserve currency (the dollar), uncontrolled debt growth presents risks:
Pressure on interest rates: With more bonds in the market, the government may have to pay higher rates to attract buyers.
Inflation: Although the impact is indirect, stimulus policies financed by debt can increase inflation.
Reduction of trust: Investors may demand higher risk premiums if they doubt the U.S. payment capacity.
Cuts in social programs: The need to reduce the deficit may lead to cuts in areas such as health, education, and infrastructure.
Why Haven't the U.S. Gone Bankrupt Yet?
The main reason is the trust in the dollar and the U.S. government. The United States has never defaulted on its debt, and the markets trust its ability to pay. Additionally, the country has a robust domestic market, high tax revenue, and control over its monetary policy through the Federal Reserve.
Ongoing Solutions and Debates
Economists and lawmakers present different paths to deal with the debt:
Tax reform: Increase taxes on large fortunes or review corporate tax exemptions.
Spending cuts: Reduce expenses on public programs or military spending.
Economic growth: Stimulate growth so that the debt-to-GDP ratio decreases naturally.
Monetary policy: Some advocate for partial debt monetization, although this poses inflationary risks.
Final Considerations
The national debt of the United States is a reflection of the complex dynamics between fiscal policy, economic growth, and social priorities. Although there is no imminent risk of collapse, the ongoing trend of debt growth requires increased attention, long-term planning, and difficult policy decisions. The sustainability of this debt will depend on the U.S.'s ability to balance investments in social welfare and infrastructure with fiscal responsibility — without undermining global confidence in the dollar and the American economy.
Keywords: U.S. National Debt, national debt, fiscal deficit, U.S. Treasury, U.S. economy, fiscal policy, public debt, federal budget.