The Federal Debt

The Federal Debt
Federal debt encompasses each year’s deficit totals combined, the value referenced here is the gross national debt – that is, debt held by the public and intra-governmental debt.

As of this writing, total federal debt is $19,093,150,844,906.08. The United States has always held debt – early figures from 1791 estimate a debt from the American Revolution of $75 million. In 1863, federal debt rose over $1 billion for the first time, primarily due to the United States Civil War. The $1 trillion mark was broken in 1982.

Debt-to-GDP
United States debt figures are imposing in a sheer numerical sense. But, in order to understand the situation, the debt must be compared to another figure. The most common approach is a debt-to-GDP ratio. Currently, this number stands at slightly above 100% of GDP.

While the inherent nature of this number (is the ratio good or bad for the economy and society?) is neutral, a highlight of the recent increases in the federal debt is important:

Although the United States is not officially fighting in a war, the debt-to-GDP ratio is the highest it has been since the aftermath of World War II. Current debt levels reflect historical debt levels incurred during wartime periods.

The Debt Ceiling
The United States Congress sets a statutory limit on federal debt – a debt ceiling. Initiated in 1917, in order to simplify the process of funding military efforts for World War I, the debt ceiling has been raised, altered, or paused at least 10 times since 2000.

The federal government is at risk of default upon reaching the debt ceiling because the Treasury can no longer borrow funds to continue operations.

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