Relevant Numbers on Federal Debt
June 8, 2009
The National Debt:
- As of June 8, 2009, the total outstanding debt was
$11.390 trillion, which is approximately 81% of U.S. Gross Domestic Product.
This amounts to a share of over $37,000 per citizen.
- The gross national debt can be divided into $7.109 trillion of
publicly held debt (domestic and foreign), and $4.280 trillion of debt held by
government accounts (trust funds), the largest of which is Social Security.
- Because trust fund debt is a matter
of internal governmental bookkeeping, economists focus on the publicly held
debt. It is this number that reflects the impact of federal borrowing on
the economy and the budget.
Publicly Held Debt:
- The publicly held debt is currently $7.109
historic high in nominal terms.
- A more important measure of the debt is its size in
relation to the nation's economy, generally stated in terms of Gross Domestic
Product (GDP). In CBO's baseline projection, accumulated federal debt held by
the public will equal 54.8% of GDP in 2009.
- Roughly 90 percent of the publicly held debt consists of
marketable securities--Treasury bills, notes, bonds, and inflation-indexed
issues (called TIPS). The remaining 10 percent comprises non-marketable
securities, such as savings bonds and securities in the state and local
government series, which are nonnegotiable, nontransferable debt instruments
issued to specific investors.
- By 2019, CBO projects publicly held debt to equal 56.1%
of GDP. If materialized, this would be the highest level since 1955. Previously,
its post-World War II high was 109% of GDP in 1946, and its post-WWII low was
reached 24% of GDP in 1974.
- Under the Government Accountability Office's (GAO)
Long-Term Budget Scenario, publicly held debt will be 91.2% of GDP by 2020 and 257.1% of GDP by 2040. The Long-Term Budget Scenario assumes discretionary
spending grows with GDP and all expiring tax provisions are extended.
- The Concord Coalition plausible baseline assumes an addition $10.3 trillion deficit over the next ten years. This scenario
assumes that discretionary spending grows at the rate of nominal GDP, that continued operations in Iraq and
Afghanistan are gradually scaled back to about a third the current level, and
that all expiring tax provisions are extended with AMT relief.
Foreign Holdings of Debt:
- As of March 2009, foreign investors held $3.265
trillion of the publicly
- The amount of the debt held by foreigners is at a
historic high. As of March 2009, foreign investors held $3.265 trillion of
Treasury Securities, $2.249 trillion of which
are held by official
- As of March 2009, China and Japan were the two largest
foreign holders of treasury securities with $768 billion and $687 billion
- Foreign holdings of Treasury securities have increased
by more than one trillion since 2000.
Interest on the Publicly Held Debt:
- Every borrowed dollar carries an interest cost. The most
direct impact of public debt on the federal budget is, therefore, the amount
of money taxpayers must come up with each year to finance past borrowing.
- Net interest
in fiscal year 2008 was $249
billion -- roughly 8% of the entire federal budget.
- Spending for interest on the debt in fiscal year 2008
($249 billion) equaled 21.7% of all individual income tax revenue ($1.146 trillion)
and more than the federal government spent on energy ($531 million), environment ($30.2 billion), education ($89.1 billion), veterans benefits ($84.7 billion), and agriculture ($27.8 billion) combined .
- During the 1980s and 90s, before the 1998-2001
surpluses, interest regularly consumed 13 percent or more of the federal
budget a year, reaching a high point of 15.4 percent in 1996.
- For fiscal year 2008, outlays for
net interest ($249 billion) equaled roughly 1.8 percent of GDP. Its recent high point was 3.3
percent of GDP in 1991.
- Under GAO's Long-Term Budget Scenario, net interest
costs will reach 4.2% of GDP by 2020 and 11.8% of GDP by 2040.
Trust Fund Debt:
- While trust fund debt does not have the same economic
and budgetary effects as publicly held debt, it is nevertheless a relevant, if
incomplete, indicator of future burdens such as Social Security, Medicare and
federal government pension payments.
- As explained by the GAO: "Because debt held by the trust
funds is neither equal to future benefit payments, nor a measure of the
commitments of the current system, it cannot be seen as a measure of this
future burden. Nevertheless, it provides an important signal of the existence
of this burden." 
- As a technical matter, trust fund balances are credited
with interest. However, trust fund interest is simply a credit of IOUs to the
respective trust fund. It does not involve an outlay of federal dollars and
thus has no economic or budgetary effect.
- According to the April 2009 Monthly Treasury Statement,
the five largest trust funds are (by the close of the
- Social Security's Federal Old Age and Survivors
Insurance, $2.244 trillion.
- Federal Employees Retirement, $738 billion.
- Department of Health and Human Services Federal
Hospital Insurance, $321 billion.
- Military Retirement Fund, $249 billion
- Social Security's Federal Disability Insurance, $214 billion.
Gross Debt and the Statutory Limit:
- The debt subject to limit is the maximum amount of money
the government is allowed to borrow without receiving additional authority
- The current statutory debt limit is $12.104 trillion.
- Congress has approved numerous increases to the statutory
debt limit since 2001 totaling $6.154 trillion.
- The most recent legislation adopted by Congress provided
for an additional $789 billion increase in the debt limit
occurred on February 17, 2009.
Federal Debt: Answers to Frequently Asked Questions -- An Update, May