Charting America's Debt: $27 Trillion and Counting
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Charting America’s Debt: $27 Trillion and Counting

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America's Debt Infographic

Why America’s Debt Doesn’t Stop Growing

Public sector debt has been a contentious topic for many years. While some believe that excessive government borrowing can be harmful over the long term, others have argued that it acts as a powerful tool for stimulating growth.

In the U.S., the latter view appears to have taken hold. Since 2008, America’s national debt has surged nearly 200%, reaching $27 trillion as of October 2020. To gain a better understanding of this ever-growing debt, this infographic takes a closer look at various U.S. budgetary datasets including the 2019 fiscal balance.

America’s Debt vs. GDP

Government debts are often represented by incredibly large numbers, making them hard to comprehend. By comparing America’s debt to its annual GDP, we can get a better grasp on the relative size of the country’s financial obligations.

YearTotal Public Debt (USD)GDP (USD)Debt as % of GDP
1994$4.5T$7.1T63%
1995$4.8T$7.5T64%
1996$5.0T$7.9T63%
1997$5.3T$8.4T63%
1998$5.5T$8.9T62%
1999$5.6T$9.4T60%
2000$5.8T$10.0T58%
2001$5.7T$10.5T54%
2002$5.9T$10.8T55%
2003$6.4T$11.2T57%
2004$7.0T$11.9T59%
2005$7.6T$12.8T59%
2006$8.2T$13.6T60%
2007$8.7T$14.2T61%
2008$9.2T$14.7T63%
2009$10.6T$14.4T74%
2010$12.3T$14.7T84%
2011$14.0T$15.3T92%
2012$15.2T$16.0T95%
2013$16.4T$16.6T99%
2014$17.3T$17.1T101%
2015$18.1T$18.0T101%
2016$18.9T$18.5T102%
2017$19.9T$19.2T104%
2018$20.5T$20.2T101%
2019$21.9T$21.1T104%
2020$23.2T$21.6T107%
April 2020$23.7T$19.5T122%

Source: Federal Reserve, U.S. Treasury

In this context, U.S. debt was relatively moderate between 1994 to 2007, averaging 60% of GDP over the timeframe. This took a drastic turn during the Global Financial Crisis, with debt climbing to 95% of GDP by 2012.

Since then, America’s debt has only increased in relative size. In April 2020, with the COVID-19 pandemic in full force, it reached a record 122% of GDP. This may sound troubling at first, but there are a few caveats.

For starters, there are many other advanced economies that have also surpassed the 100% debt-to-GDP milestone. The most noteworthy is Japan, where the debt-to-GDP ratio has climbed beyond 200%. Furthermore, this is not the first time America has found itself in this situation—by the end of World War II, debt-to-GDP peaked at 106% before declining to historic lows in the 1970s.

What’s Preventing the Debt From Shrinking?

Although the U.S. continuously pays off portions of its debt, the total amount it owes has increased each year since 2001. That’s because the federal government runs consistent budget deficits, meaning it spends more than it earns. During economic crises, these deficits can become incredibly large.

Fiscal Year (Sept 30)Budget Surplus or Deficit (USD billions)
2000+$236B
2001+$128B
2002-$158B
2003-$378B
2004-$418B
2005-$318B
2006-$248B
2007-$161B
2008-$458B
2009-$1,412B
2010-$1,294B
2011-$1,299B
2012-$1,076B
2013-$680B
2014-$485B
2015-$441B
2016-$585B
2017-$665B
2018-$779B
2019-$984B
2020-$3,131B

Source: Federal Reserve

In the aftermath of the Global Financial Crisis, the U.S. recorded an annual deficit of $1.4 trillion in FY2009. This was largely due to the $787 billion American Recovery and Reinvestment Act of 2009, which provided tax rebates and other economic relief.

In the economic battle against COVID-19’s impacts, the boundaries have been pushed even further. The annual deficit for FY2020 weighs in at a staggering $3.1 trillion, the largest ever. Contributing to this historic deficit was the $2 trillion CARES Act, which provided wide-ranging support to the entire U.S. economy.

Breaking Down the 2019 Fiscal Balance

Even in the years between these two economic crises, government spending still outpaced revenues. To find out more, we’ve broken down the 2019 fiscal balance into its various components.

Federal Spending

Total spending in FY2019 was roughly $4.4 trillion, and can be broken out into three components.

The first component is Mandatory Spending, which accounted for 62% of the total. Mandatory spending is required by law, and includes funding for important programs such as social security.

CategoryAmount (USD billions)Percent of Total Federal Spending
Health programs$1,121B25.5%
Social security$1,039B23.6%
Income security$301B6.8%
Federal civilian and military retirement$164B3.7%
Other$109B2.5%
Total mandatory spending$2,735B62.2%

Figures may not add to 100 due to rounding. Source: Peter G. Peterson Foundation

The largest category here was Health, with $1.1 trillion in funding for programs such as Medicare and Medicaid. Social security, which provides payments to retirees, was the second largest at $1.0 trillion.

The second component is Discretionary Spending, which accounted for 30% of the total. Discretionary spending is determined on an annual basis by Congress and the President.

Discretionary SpendingAmount (USD)Share of Total Federal Spending
Defense$677B15.4%
Transportation$100B2.3%
Veteran's benefits & services$85B1.9%
Education$72B1.6%
Health$66B1.5%
Administration of justice$59B1.3%
International affairs$52B1.2%
General government$51B1.2%
Housing assistance$49B1.1%
Natural resources and environment$44B1.0%
General science, space, and technology$32B0.7%
Community and regional development$27B0.6%
Training, employment, and social services$23B0.5%

Total discretionary spending


$1,338B


30.4%

Figures may not add to 100 due to rounding. Source: Peter G. Peterson Foundation

At $677 billion, the Defense category represents over half of total discretionary spending. These funds are spread across the five branches of the U.S. military: the Army, Marine Corps, Navy, Air Force, and Space Force.

The third component of spending is the net interest costs on existing government debt. For FY2019, this was approximately $327 billion.

Federal Revenues

Revenues in FY2019 fell short of total spending, coming in at approximately $3.5 trillion. These inflows can be traced back to six categories.

CategoryAmount (USD billions)Percent of Total Revenues
Individual income taxes$1,732B50.0%
Payroll taxes$1,247B36.0%
Corporate income taxes$242B7.0%
Other$104B3.0%
Excise taxes$104B3.0%
Customs duties$69B2.0%
Total revenues$3,464B100.0%

Figures may not add to 100 due to rounding. Source: Peter G. Peterson Foundation

Revenues overwhelmingly relied on individual income and payroll taxes, which together, accounted for 86% of the total. Corporate income taxes, on the other hand, accounted for just 7%.

Is America’s Debt a Cause for Concern?

The general consensus following the events of 2008 is that large fiscal stimulus (supported by government borrowing) was effective in speeding up the consequent recovery.

Now facing a pandemic, it’s likely that many Americans would support the idea of running large deficits to boost the economy. Surveys released in July 2020, for example, found that 82% of Americans wanted federal relief measures to be extended.

Looking beyond COVID-19, however, does reveal some warning signs. One frequent criticism of the ever-growing national debt is its associated interest costs, which could cannibalize investment in other areas. In fact, the effects of this dilemma are already becoming apparent. Over the past decade, the U.S. has spent more on interest than it has on programs such as veterans benefits and education.

us federal net interest costs chart

With low interest rates expected for the foreseeable future, the federal government is likely to continue running its large annual deficits—at least until the effects of COVID-19 have fully subsided. Perhaps after this crisis is over, it will be time to assess the long-term sustainability of America’s rising national debt.

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Timeline: 150 Years of U.S. National Debt

This interactive visual shows how the U.S. national debt has fluctuated since 1900, as well as projections all the way to 2050.

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Looking Back at 150 Years of U.S. Debt

The total U.S. national debt reached an all-time high of $28 trillion* in March 2021, the largest amount ever recorded.

Recent increases to the debt have been fueled by massive fiscal stimulus bills like the CARES Act ($2.2 trillion in March 2020), the Consolidated Appropriations Act ($2.3 trillion in December 2020), and most recently, the American Rescue Plan ($1.9 trillion in March 2021).

To see how America’s debt has gotten to its current point, we’ve created an interactive timeline using data from the Congressional Budget Office (CBO). It’s crucial to note that the data set uses U.S. national debt held by the public, which excludes intergovernmental holdings.

*Editor’s note: This top level figure includes intragovernmental holdings, or the roughly $6 trillion of debt owed within the government to itself.

What Influences U.S. Debt?

It’s worth pointing out that the national debt hasn’t always been this large.

Looking back 150 years, we can see that its size relative to GDP has fluctuated greatly, hitting multiple peaks and troughs. These movements generally correspond with events such as wars and recessions.

Decade Gross debt at start
of decade
(USD billions)
Avg. Debt Held By Public
Throughout Decade
(% of GDP)
Major Events
1900-4.8%-
1910-10.0%World War I
1920-22.9%The Great Depression
1930$1636.4%President Roosevelt's New Deal
1940$4075.1%World War II
1950$25756.8%Korean War
1960$28637.3%Vietnam War
1970$37126.1%Stagflation (inflation + high unemployment)
1980$90833.7%President Reagan's tax cuts
1990$3,23344.7%Gulf War
2000$5,67436.6%9/11 attacks & Global Financial Crisis
2010$13,56272.4%Debt ceiling is raised by Congress
2020$27,748105.6%COVID-19 pandemic
2030P-121.8%-
2040P-164.7%-
2050P-195.2%-

Source: CBO, The Balance

To gain further insight into the history of the U.S. national debt, let’s review some key economic events in America’s history.

The Great Depression

After its WWI victory, the U.S. enjoyed a period of post-war prosperity commonly referred to as the Roaring Twenties.

This led to the creation of a stock market bubble which would eventually burst in 1929, causing massive damage to the U.S. economy. The country’s GDP was cut in half (partially due to deflation), while the unemployment rate rose to 25%.

Government revenues dipped as a result, pushing debt held by the public as a % of GDP from its low of 15% in 1929, to a high of 44% in 1934.

World War II

WWII quickly brought the U.S. back to full employment, but it was an incredibly expensive endeavor. The total cost of the war is estimated to be over $4 trillion in today’s dollars.

To finance its efforts, the U.S. relied heavily on war bonds, a type of bond that is marketed to citizens during armed conflicts. These bonds were sold in various denominations ranging from $25-$10,000 and had a 2.9% interest rate compounded semiannually.

Over 85 million Americans purchased these bonds, helping the U.S. government to raise $186 billion (not adjusted for inflation). This pushed debt above 100% of GDP for the first time ever, but was also enough to cover 63% of the war’s total cost.

The Postwar Period

Following World War II, the U.S. experienced robust economic growth.

Despite involvement in the Korea and Vietnam wars, debt-to-GDP declined to a low of 23% in 1974—largely because these wars were financed by raising taxes rather than borrowing.

The economy eventually slowed in the early 1980s, prompting President Reagan to slash taxes on corporations and high earning individuals. Income taxes on the top bracket, for example, fell from 70% to 50%.

2008 Global Financial Crisis

The Global Financial Crisis served as a precursor for today’s debt landscape.

Interest rates were reduced to near-zero levels to speed up the economic recovery, enabling the government to borrow with relative ease. Rates remained at these suppressed levels from 2008 to 2015, and debt-to-GDP grew from 39% to 73%.

It’s important to note that even before 2008, the U.S. government had been consistently running annual budget deficits. This means that the government spends more than it earns each year through taxes.

The National Debt Today

The COVID-19 pandemic damaged many areas of the global economy, forcing governments to drastically increase their spending. At the same time, many central banks once again reduced interest rates to zero.

This has resulted in a growing snowball of government debt that shows little signs of shrinking, even though the worst of the pandemic is already behind us.

In the U.S., federal debt has reached or surpassed WWII levels. When excluding intragovernmental holdings, it now sits at 104% of GDP—and including those holdings, it sits at 128% of GDP. But while the debt is expected to grow even further, the cost of servicing this debt has actually decreased in recent years.

U.S. federal debt costs

This is because existing government bonds, which were originally issued at higher rates, are now maturing and being refinanced to take advantage of today’s lower borrowing costs.

The key takeaway from this is that the U.S. national debt will remain manageable for the foreseeable future. Longer term, however, interest expenses are expected to grow significantly—especially if interest rates begin to rise again.

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Visualizing the Snowball of Government Debt

After an unprecedented borrowing spree in response to COVID-19, what does government debt look like around the world?

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Visualizing the Snowball of Government Debt in 2021

As we approach the second half of 2021, many countries around the world are beginning to relax their COVID-19 restrictions.

And while this signals a return to normalcy for much of the global economy, there’s one subject that’s likely to remain controversial: government debt.

To see how each country is faring in the aftermath of an unprecedented global borrowing spree, this graphic from HowMuch.net visualizes debt-to-GDP ratios using April 2021 data from the International Monetary Fund (IMF).

Ranking the Top 10 in Government Debt

Government debt is often analyzed through the debt-to-GDP metric because it contextualizes an otherwise massive number.

Take for example the U.S. national debt, which currently sits at over $27 trillion. In isolation this figure sounds daunting, but when expressed as a % of U.S. GDP, it works out to a more relatable 133%. This format also allows us to make a better comparison between countries, especially when their economies differ in size.

With that being said, here are the top 10 countries in terms of debt-to-GDP. For further context, we’ve included their 2019 and 2020 values as well.

Rank (2021)CountryDebt-to-GDP (2019)Debt-to-GDP (2020)Debt-to-GDP (April 2021)
#1🇯🇵 Japan235%256%257%
#2🇸🇩 Sudan200%262%212%
#3🇬🇷 Greece185%213%210%
#4🇪🇷 Eritrea189%185%176%
#5🇸🇷 Suriname93%166%157%
#6🇮🇹 Italy135%156%157%
#7🇧🇧 Barbados127%149%143%
#8🇲🇻 Maldives78%143%140%
#9🇨🇻 Cape Verde125%139%138%
#10🇧🇿 Belize98%127%135%

Source: IMF

Japan tops the list with a ratio of 257%, though this isn’t really a surprise—the country’s debt-to-GDP ratio first surpassed 100% in the 1990s, and in 2010, it became the first advanced economy to reach 200%.

Such significant debt burdens are the result of non-traditional monetary policies, many of which were first implemented by Japan, then adopted by others. In the late 1990s, for instance, the Bank of Japan (BoJ) set interest rates at 0% to counter deflation and promote economic growth.

This low cost of borrowing enables businesses and governments to accumulate debt much more freely, and has seen widespread use among other developed nations post-2008.

What are the Risks?

Given that a majority of countries in this visual are red (meaning their debt-to-GDP ratios are over 50%), it’s safe to say that government borrowing is common practice.

But are large government debts a cause for concern?

Some believe that excessive borrowing will lead to higher interest costs in the long run, which could detract from economic growth and public sector investment. This theory is unlikely to become a reality anytime soon, however.

A recent report by RBC Wealth Management reported that the cost of servicing U.S. federal debt actually decreased in 2020, thanks to the low borrowing costs mentioned previously.

Perhaps a more prescient question would be: how long can the world’s central banks keep interest rates at near-zero levels?

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