Key Drivers of the National Debt. What is causing the growth of our national debt? There are three primary drivers of the overall growth in spending: America's aging population, rising healthcare costs, and rapidly escalating interest costs.
Tax cuts, stimulus programs, increased government spending, and decreased tax revenue caused by widespread unemployment generally account for sharp rises in the national debt. Visit the Historical Debt Outstanding dataset to explore and download this data.
High-interest loans -- which could include payday loans or unsecured personal loans -- can be considered bad debt, as the high interest payments can be difficult for the borrower to pay back, often putting them in a worse financial situation.
Debt factoring is when a business sells its accounts receivables to a third party at a discount, enabling companies to immediately unlock cash tied up in unpaid invoices without having to wait the usual payment terms. Debt factoring is also another term used for invoice factoring.
The national debt level of the United States is what the federal government owes its creditors. Debt rises when the U.S. spends more than it earns from taxes and other revenue. The U.S. government issues government bonds to finance deficits.
Mortgage debt is most Americans' largest debt, exceeding other types by a wide margin. Student loans are the next largest type of debt among those listed in the data, followed closely by auto loans.
Historical origins. The origins of developing-world debt crisis can be traced to the oil-price shock of 1973–74. At the time, the member states of the Organization of the Petroleum Exporting Countries (OPEC) limited the supply of oil, which resulted in a huge increase in its price.
Of course, just as with an individual or family, cutting spending and increasing revenue are smart first steps. Beyond that, the government considers things like new taxes, a higher retirement age, removing loopholes from the tax code, and more to reduce annual deficits and the national debt.
The Bottom Line
Different types of debt include secured and unsecured, or revolving and installment. Debt categories can also include mortgages, credit card lines of credit, student loans, auto loans, and personal loans.
Generally, Congress allocates over half of the discretionary budget towards national defense and the rest to fund the administration of other agencies and programs. These programs range from transportation, education, housing, and social service programs, as well as science and environmental organizations.
Public debt, which accounts for roughly 80% of the total, is owed to investors. Those investors include foreign governments, mutual funds, pension funds, and individuals among others. The Federal Reserve owns part of this public debt. Intragovernmental debt accounts for the other 20%.
costs of borrowing increase the debt burden.
Running up $50,000 in credit card debt is not impossible. About two million Americans do it every year. Paying off that bill?
The Standard Route is what credit companies and lenders recommend. If this is the graduate's choice, he or she will be debt free around the age of 58. It will take a total of 36 years to complete. It's a whole lot of time but it's the standard for a lot of people.
One of the main culprits is consistently overspending. When the federal government spends more than its budget, it creates a deficit. In the fiscal year of 2023, it spent about $381 billion more than it collected in revenues. To pay that deficit, the government borrows money.
Japan and China have been the largest foreign holders of US debt for the last two decades. From 2000 to 2023, annual totals are based on data from December, while the 2024 data is updated through April.
India takes the top spot. The world's most populous country owed $38.3bn to the WB at the end of 2022, down by almost $1.5bn from a year earlier. India's outstanding balance is almost double that of the next biggest debtor, Indonesia, with $20.6bn.
Under current policy, the United States has about 20 years for corrective action after which no amount of future tax increases or spending cuts could avoid the government defaulting on its debt whether explicitly or implicitly (i.e., debt monetization producing significant inflation).
Americans owe $986 billion on credit cards, surpassing the pre-pandemic high of $927 billion. We owe $11.92 trillion on mortgages, $1.55 trillion on vehicle loans and $1.60 trillion for student loans.
When the expenditures of a government are more than its tax revenues for a prolonged period, the government may enter into a debt crisis. Various forms of governments finance their expenditures primarily by raising money through taxation.