The United States has been in debt since its founding. The debt from the American Revolutionary War had risen to over $75 million by January 1, 1791. The debt grew for the next 45 years until 1835, when it decreased significantly as a result of the sale of government-owned property and cuts in the federal budget. Soon after, an economic crisis caused the debt to increase once more into the millions. The debt increased by more than 4,000% during the American Civil War, rising from $65 million in 1860 to $1 billion in 1863 and almost $3 billion shortly after the war ended in 1865. The debt steadily increased into the 20th century, reaching about $22 billion after the country funded its involvement in World War I.
Key events in recent history that triggered large increases in debt include the conflicts in Afghanistan and Iraq, the financial crisis of 2008, and the COVID-19 pandemic. From FY 2019 to FY 2021, government spending increased by about 50%, largely due to the COVID-19 pandemic. Tax cuts, stimulus packages, increased government spending, and lower tax revenues brought on by widespread unemployment typically contribute to significant increases in the national debt.
Comparing a country’s debt to its gross domestic product (GDP) reveals its capacity to pay it down.
This ratio is regarded as a superior indicator of a country’s fiscal health than simply the national debt figure since it illustrates the debt burden in relation to the country’s total economic output and, as a result, its ability to repay it. When both debt and GDP were approximately $16.7 trillion, the U.S. debt to GDP ratio surpassed 100% in 2013. In 2023, the US national debt has surged to over 33 trillion dollars.
Understanding the magnitude of such large numbers can be challenging. Visualizing the debt can help to put the figures into perspective.
Ultimately, understanding how much debt the US is in requires considering not just the raw number, but also the context of the economy and the government’s ability to manage it.
