Q: Why are different numbers sometimes used to describe the federal debt?
A: The figure that appears most often in the news is the government's total debt (or gross debt), which is nearly $12.8 trillion. But this figure has two components: intragovernmental debt ($4.5 trillion) and "debt held by the public" ($8.3 trillion).
Intragovernmental debt is money that has been borrowed from government trust funds such as the one for Social Security. When a trust fund collects more money than it pays out in a particular year, the surplus money is used to purchase Treasury securities, which are essentially IOUs to the trust fund.
Debt held by the public consists of money the federal government owes individuals, corporations, state and local governments, foreign governments, and other entities outside the U.S. government. Economists and federal budget analysts often focus on this figure because of the immediate impact this type of debt has on the budget, interest rates and the economy.
The federal debt should not be confused with the deficit, which represents how much money the government borrows in a single year. The debt held by the public is the total of all prior years' deficits. The debt figures should also be distinguished from the government's unfunded promises, notably for future Social Security and Medicare benefits.