No single person got the U.S. out of debt permanently, but President Andrew Jackson famously eliminated the national debt in 1835, the only time it's happened in U.S. history, through aggressive spending cuts, land sales, and tariffs, though it quickly returned due to subsequent borrowing and economic events like the Panic of 1837. Historically, figures like Treasury Secretary Alexander Hamilton established systems to manage and pay down debt from the Revolutionary War, while modern efforts involve balanced budgets, tax revenue, and economic growth, with mixed results over time.
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.
Deficits and debt
The ratio of debt held by the public to GDP, a primary measure of U.S. federal debt, fell from 47.8% in 1993 to 33.6% by 2000. Debt held by the public was actually paid down by $453 billion over the 1998-2001 periods, the only time this happened between 1970 and 2018.
The history of the United States public debt began with federal government debt incurred during the American Revolutionary War by the first U.S treasurer, Michael Hillegas, after the country's formation in 1776.
In 1832, he vetoed a bill by Congress to reauthorize the Second Bank of the United States, viewing the Bank as a fourth branch of government run by the elite. After a lengthy struggle, the Bank was dismantled. In 1835, Jackson became the only U.S. president to pay off the national debt.
The largest holder of U.S. debt is the U.S. government itself, primarily through the Federal Reserve and intragovernmental holdings (like Social Security trust funds), followed by domestic investors (mutual funds, banks, individuals) and then foreign investors, with Japan often leading as the largest foreign holder, though China's holdings have decreased.
Notably, the public debt actually shrank to zero by January 1835, under President Andrew Jackson. But soon after, it quickly grew into the millions again. The American Civil War resulted in dramatic debt growth.
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.
The terms “national deficit”, “federal deficit” and “U.S. deficit” have the same meaning and are used interchangeably by the U.S. Treasury. A surplus occurs when the government collects more money than it spends. The last surplus for the federal government was in 2001.
President Clinton oversaw the second longest period of peacetime economic expansion in American history. Months into his first term, he signed the Omnibus Budget Reconciliation Act of 1993, which raised taxes and set the stage for future budget surpluses.
1 United States 21,764,799 2 Euro area 18,075,643 3 United Kingdom 9,837,535 4 France 7,368,685 5 Norway 7,110,029 6 Germany 6,6,91,139 7 Japan 4,687,815 8 Netherlands 4,197,719 9 Luxembourg 3,965,300 10 Italy 2,749,75 https://www.ceicdata. com/en/indicator/norway/external-debt--of-nominal- gdp https://www.gfmag.com/ ...
It's highly unlikely the U.S. will ever fully "pay off" its national debt, as governments manage debt by rolling it over, issuing new bonds to pay old ones, and relying on economic growth (GDP) to keep debt manageable relative to revenue, but the growing debt load requires continuous management through budget adjustments, spending cuts, tax increases, or economic expansion to avoid financial instability, notes. The U.S. can borrow in its own currency and maintain its status as a safe asset, but excessive debt risks future economic problems if interest rates rise or investor confidence wanes, say the Brookings Institution and The University of Sydney.
Over the 12 months from the close of trading on Jan. 17, 2025, to the end of day Jan. 15, 2026, the federal government added approximately $2.25 trillion to the national debt, according to calculations shared exclusively with Fortune by the Peter G. Peterson Foundation.
Federal Reserve data shows that about 23% of Americans have no debt.
As a result, the U.S. actually did become debt free, for the first and only time, at the beginning of 1835 and stayed that way until 1837. It remains the only time that a major country was without debt.
During Reagan's presidency, the federal debt held by the public nearly tripled in nominal terms, from $738 billion to $2.1 trillion. This led to the U.S. moving from the world's largest international creditor to the world's largest debtor nation.
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