How Bad Is the National Debt?

The national debt can be counted in several ways, and each gives a different picture of the same borrowing.

The deficit is the gap in a single fiscal year between what the federal government spends and what it collects. The debt is the borrowing that covers those gaps, accumulated over the nation’s history, with the interest owed on it. So a president can shrink the deficit and still add to the debt, because any deficit, even a smaller one, is new borrowing.

Gross debt counts all of it, including the Treasury securities held by federal trust funds such as Social Security’s. That part is the government owing itself. Debt held by the public is what the government owes to lenders outside it, including the Federal Reserve, foreign investors and Americans. On September 30, 2026, the Treasury put gross debt at $40.2 trillion and debt held by the public at $32.4 trillion.

In 1998 the General Accounting Office described debt held by the public as the measure that “best represents the cumulative effect of past federal borrowing on the economy”. The office is now called the Government Accountability Office.

Debt is also measured against the size of the economy, as a share of gross domestic product (GDP). That is how the Congressional Budget Office (CBO) and the International Monetary Fund report it, and it lets years and countries of different size be compared. Suppose a $30 trillion economy adds $1 trillion of debt. That is a smaller burden than a $5 trillion economy adding $500 billion. A president can therefore add a lot of debt in dollars while the debt ratio falls, if the economy grows faster than the debt.

The debt limit caps how much the Treasury may borrow to pay for spending and tax laws that Congress has already passed. In the Treasury’s words, it “does not authorize new spending commitments”. Congress has raised, extended, suspended or redefined it 90 times since 1960. Of those, 53 were under Republican presidents and 37 under Democratic ones.

Of the presidents from Reagan to Biden, Clinton is the only one under whom gross debt fell as a share of the economy, by 9.4 points over eight years. Debt held by the public also fell under Clinton alone, by 16.4 points. The table below follows each president from the end of the fiscal year in which he took office to the end of the fiscal year in which his successor did. Its figures come from the historical tables of the Office of Management and Budget (OMB).

The table also notes which party held Congress, because Congress passes the spending and tax laws a president signs. Fiscal year 2009 began under G.W. Bush and counts in his row, though the bank rescue (Troubled Asset Relief Program) and the Recovery Act both became law in it.

Under Clinton, federal revenue rose from 17.0% of GDP in 1993 to 20.0% in 2000, the highest share since 1944. Defense spending fell from 4.3% of GDP to 2.9% over the same years. His own party held Congress for his first two years, and the Republicans held it for his last six.

Under Biden the debt ratio rose by 0.1 point, the smallest increase in the table, because GDP in current dollars grew almost as fast as the debt. The deficit still stayed above 5% of GDP in each of his four budget years. In dollars, the debt grew under every president in the table, so the useful comparison is with the size of the economy.

A president’s first budget takes effect only on October 1 of the inauguration year, when the term’s second fiscal year begins. Until then, for about eight months, the government is in a fiscal year that began under the previous president. Congress can still pass spending laws for that year after the inauguration, as it did in 2009, 2017 and 2025. The fiscal 2025 deficit of $1.8 trillion, for example, covers a year that began on October 1, 2024. Trump’s second term began on January 20, 2025.

Much of the rest of the budget is inherited too. Social Security, Medicare, Medicaid and interest payments continue under existing law without any new vote. In projections by the Congressional Budget Office (CBO), spending on Social Security and Medicare grows faster than the economy over the next ten years.

Presidents also inherit wars and recessions. Brown University’s Costs of War project puts the cost of the wars that followed September 11, 2001, at about $8 trillion, not counting future interest. Obama inherited both the Iraq and Afghanistan wars. By the National Bureau of Economic Research’s dates, G.W. Bush took office two months before the 2001 recession began, and Obama during the 2007–09 recession. The 2020 recession began in Trump’s last year, and Biden took office nine months after it ended.

Interest is owed on whatever debt a president inherits. Net interest doubled as a share of gross domestic product (GDP) between fiscal 2020 and 2025, from 1.6% to 3.2%, just above its previous peak in 1991. In fiscal 2025 it cost $970 billion, more than the $916 billion spent on defense. Medicare, at $997 billion, still cost slightly more.

Congress writes the laws that set spending and taxes. The Constitution says that “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law”. The Senate votes on the major fiscal laws of the last 25 years show how far each one was a single party’s.

The strongest Republican case is that the long-run problem is spending, not revenue. Revenue has averaged 17.3% of gross domestic product (GDP) over the past 50 years. The Congressional Budget Office (CBO) projects 17.8% in 2036. Spending has averaged 21.2% of GDP and is projected to reach 24.4% in 2036. CBO puts that rise down to Social Security, Medicare and net interest, partly offset by falling discretionary spending.

Republicans also point to the deficits of fiscal 2009, at 9.8% of GDP, and fiscal 2010, at 8.7%. Since 1930, only the Second World War and the pandemic years 2020 and 2021 saw larger ones. Democrats held Congress in both years and the White House from January 2009, though fiscal 2009 began under G.W. Bush.

Republicans can also point to the 2009 Recovery Act, which drew three Republican votes in the Senate, and the 2021 American Rescue Plan, which drew none. They can point as well to the Affordable Care Act, passed in 2010, which expanded Medicaid and created premium tax credits.

On taxes, the strongest case is not that tax cuts pay for themselves, which the official estimates of the 2017 act contradict. It is that lower rates raise investment and growth, which wins back part of the lost revenue.

The Joint Committee on Taxation (JCT) put the act’s conventional cost, before any effect on the size of the economy, at $1.456 trillion over 2018 to 2027. It found the act would raise GDP by about 0.7% on average over those years. That growth would win back $451 billion in revenue, less $66 billion in extra interest. The net $385 billion recovers about a quarter of the cost.

The strongest Democratic case is that tax choices built the debt as well. The Tax Foundation, a nonprofit tax policy research group, read a 2011 CBO review as showing what the Bush tax cuts of 2001, 2003 and 2004 cost. By its reading, they added about $1.8 trillion to deficits over 2002 to 2011, interest included.

The Committee for a Responsible Federal Budget is a nonprofit whose leaders include former heads of CBO and of the House and Senate budget committees. It estimates, from a 2025 CBO analysis, that extending the 2017 tax cuts would add about $37 trillion to the debt by 2054. As that group reports it, CBO found the extension would add to growth at first, start to subtract from it in 2028 and leave the economy smaller from 2034.

Democrats also note that Clinton’s 1993 budget act passed with no Republican votes and added income tax brackets of 36% and 39.6%. Deficits then fell every year to 1997. Surpluses followed in fiscal 1998 to 2001, the only ones since 1969.

In 2013 two economists at the International Monetary Fund, Olivier Blanchard and Daniel Leigh, studied plans to cut deficits during the crisis, which they date from 2009. Their main sample was the plans of 26 European economies for 2010 and 2011. In advanced economies, they found, “stronger planned fiscal consolidation has been associated with lower growth than expected”. They read this as fiscal multipliers, the effect of budget changes on output, being substantially higher than forecasters had assumed.

Download this conclusion: did Obama double the debt?

This card takes apart the claim that Obama doubled the national debt. It shows debt held by the public on the days he took office and left, $6.3 trillion and $14.4 trillion. It also shows gross debt on those days, $10.6 trillion and $19.9 trillion. It is 1,200 by 630 pixels, and anyone may download it and post it.

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Debt held by the public is already about double its average over the past 50 years, which was 51.2% of gross domestic product (GDP). Under current law, the Congressional Budget Office (CBO) projects it to rise every year, from 101% of GDP in 2026 to 120% in 2036. That would be higher than at any point in the nation’s history, above the record of 106% set in 1946. It would keep rising after that, and over the following two decades it would reach 175%.

In CBO’s projections, the deficit grows from $1.9 trillion in 2026 to $3.1 trillion in 2036. As a share of GDP it rises from 5.8% to 6.7%. The average over the past 50 years was 3.8% of GDP.

Net interest grows fastest of the main parts of the budget in CBO’s projections. It roughly doubles, from $1.0 trillion in 2026 to $2.1 trillion in 2036. By then it equals 4.6% of GDP.

The debt counts only what has already been borrowed. The Treasury’s Financial Report for fiscal 2025 projects that, under current policy, spending other than interest will exceed receipts over the next 75 years by $79.6 trillion in present value. Present value counts a future dollar as worth less than a dollar today, which could be invested and earn interest. The report concludes that the projected rise in the debt ratio means “current policy is unsustainable”. Its balance sheet shows $6.1 trillion of assets against $47.8 trillion of liabilities.

Whether debt this high slows growth is disputed. In 2010 Carmen Reinhart and Kenneth Rogoff reported on growth in 20 advanced economies after the Second World War. When public debt was above 90% of GDP, they found, growth averaged −0.1%. Three economists who rechecked the work later wrote that it gave “significant support for the austerity agenda” in Europe and the United States.

Those economists, Thomas Herndon, Michael Ash and Robert Pollin, found coding errors, selective exclusion of available data and unconventional weighting in it. Corrected, average real growth in those economies was 2.2% when debt was above 90% of GDP. Reinhart and Rogoff acknowledged the coding error but said it did not affect their paper’s “central message” in any significant way. They disputed the charges of selective exclusion and unconventional weighting.

Measured against their economies, some countries carry more debt than the United States. By the International Monetary Fund’s figures, Japan’s gross government debt has been above 200% of its GDP since 2013. By the same measure, the United States’ was 122% in 2024.

Foreign investors held about $9.2 trillion of Treasury securities in July 2026, by the Treasury’s estimates. Japan held the most, $1.10 trillion, followed by the United Kingdom with $998 billion. China, with $618 billion, was third.

Serious, and getting worse. Now about the size of the whole economy, debt held by the public is close to its 1946 record. Under current law the Congressional Budget Office (CBO) projects it at 120% of gross domestic product (GDP) in 2036 and 175% in 2056. Net interest already costs more than defense, and it roughly doubles within ten years. The Treasury calls the path unsustainable.

Both parties built it. Measured against the economy, the debt rose under every president from Reagan to Biden except Clinton. On the official estimate of the 2017 tax act, growth would recover about a quarter of its cost, so the act would not pay for itself. Most of the coming rise in spending, though, is net interest, Social Security and Medicare, under laws already on the books. The best-known claim of a danger line, that growth stalls once debt passes 90% of GDP, did not survive a recheck.

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The verdict above as one image, with the figures that frame it: federal debt held by the public as a percentage of GDP. It shows the record of 106% in 1946 and 99.4% in 2025. It also shows the Congressional Budget Office’s projections under current law, 120.2% in 2036 and 175% in 2056. The image is 1,200 by 630 pixels, the size social networks use for link previews, and anyone may download it and post it.

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