The United States is one of the world's most eager consumers of national debt. Due to the high volume of new US national debt being added on an irregular basis, this clock is regularly updated. Last update: 24 July 2018
Source: USA.gov website. US national debt statistics include Intragovernmental Holdings and allowance of one day delay in banks reporting to the US Treasury.
The national debt of the United States is counted as all of the debt owed by the national government, based in Washington DC. Debts owed by states are not included in the figure.
The IMF records the US national debt as the 16th highest in the world, when expressed as a percentage of the country’s GDP. In fact, the USA owes a sum that is greater than its GDP, which is the country’s annual income.
The list below shows all of the countries that have a higher debt-to-GDP ratio than the United States:
US government debt is the responsibility of the Treasury Department. Money is raised in the form of bonds, which are known as “Treasury bonds,” “Treasury bills,” or “T-bills.”
Bonds are sold in auctions, which are conducted by the Federal Financing Bank each sale event can raise a maximum of $15 billion.
The US national debt is subdivided into two sections. These are defined as “debt held by the public” and “intragovernmental holdings.” The IMF figure for the USA’s debt to GDP ratio of 108% includes both of these figures. Some only count the debt held by the public as the national debt. This figure works out at about 77% of GDP.
Intragovernmental holdings include the nation’s obligations to pay pensions and disability benefit to ex-government employees. This fund is held in trust and is called the Civil Service Retirement and Disability Fund (CSRDF). The assets of this fund are Treasury bonds, which is how this pension obligation gets accounted for as part of the national debt.
Fannie Mae and Freddie Mac are two mortgage financing institutions that are wholly owned by the US Federal government. These two government-sponsored agencies were judged to be independent and their debts did not count as being owed by the nation — they each had their own independent credit rating and raised funds on the market outside of the Treasury’s mechanisms.
In the 2008 financial crisis, both of these institutions approached bankruptcy due to the collapse in payments from subprime mortgages, which were underwritten by these two institutions.
In September 2008, the US government took both Fannie Mae and Freddie Mac into “conservatorship,” which gave their debts a guarantee from the government. Under normal conditions, this action would have transferred the debts of Fannie Mae and Freddie Mac to the government account, adding them to the official figure of the national debt. However, the White House Budget Director at the time ruled that the construct of “conservatorship” kept the debts of these two institutions at arms length and not a part of government obligations.
Despite being kept separate from government finances, the Committee for a Responsible Federal Budget estimates that the total cost to the nation of stabilizing Fannie Mae and Freddie Mac added $238 billion to the national debt. Nonetheless, the structure that allows the Federal government to exclude the balance sheets of these two institutions from the Federal account prevents a total of $5 trillion from being regarded as US national debt.
The United States Congress has the right over oversight on all government departments including the Treasury. Until 1917 the Treasury had to seek the approval of Congress for every bond auction. Since, then, the debt raising capabilities of the Treasury has been limited by a debt ceiling, which is set by Congress.
The debt ceiling is stated as an amount, not a percentage of GDP. Thanks to inflation and legislation that expands government activities, that ceiling is often hit and needs to be raised. If the debt ceiling is not raise the Treasury has to resort to alternative measures to raise funds. Once those measures are exhausted, the government would go bankrupt. The congress sometimes plays politics and refuses to raise the debt ceiling in order to gain concessions on other areas of policy.
The debt ceiling has always been raise before the the Treasury runs out of “extraordinary measures.” Without an agreement to increase the ceiling, the US government would not be able to pay its bills, and so would be technically in default, or even bankrupt.
The debt ceiling covers all US government debt, including intragovernmental holdings.
The Federal Reserve Bank is a private institution and not a part of the US Treasury. As such, the organization does not have the right to issue government bonds. It is allowed to buy bonds and it is by this mechanism that the Federal Reserve enabled the US Treasury to raise funds in 2008 without increasing interest rates. The US government needed a large amount of money to help refund banks that were in trouble. The Fed bought Treasury bonds from US banks and also direct from the Federal Financing Bank. As a result of this action, which is called “quantitative easing,” the Federal Reserve is now a major holder of US government debt.
As well as the Federal Reserve, US banks, insurance companies, and pension funds are major holders of US Treasury bonds. Private investors can also own government bonds and overseas investors and public institutions also invest money in US government debt.
The major investor categories for US debt in order of size of investment are:
Please see the table below for a more detailed breakdown of investors:
|US Treasury Bond Buyers||Percentage Share||Market Value ($bn) Q4 2017|
|U.S. savings bonds||0.78%||159|
|Private Pension Funds||1.88%||385.40|
|State and local government pension funds||1.06%||217.40|
|State and local governments||3.50%||717.00|
|Foreign and international||30.67%||6,284.90|