TreasuryDirect KIDS - The History of U.S. Public Debt (2024)

FAQs

Who owns the most US public debt? ›

Nearly half of all US foreign-owned debt comes from five countries. All values are adjusted to 2023 dollars. As of January 2023, the five countries owning the most US debt are Japan ($1.1 trillion), China ($859 billion), the United Kingdom ($668 billion), Belgium ($331 billion), and Luxembourg ($318 billion).

By January of 1835, for the first and only time, all of the government's interest-bearing debt was paid off. Congress distributed the surplus to the states (many of which were heavily in debt). The Jackson administration ended with the country almost completely out of debt!

The U.S. has carried debt since its inception. Debts incurred during the American Revolutionary War amounted to over $75 million by January 1, 1791. Over the next 45 years, the debt continued to grow until 1835 when it notably shrank due to the sale of federally-owned lands and cuts to the federal budget.

Jefferson and the National Debt As President, Jefferson reduced taxes, paid down the debt, reined in military spending, and embarked on public works programs.

The United States pays interest on approximately $850 billion in debt held by the People's Republic of China. China, however, is currently in default on its sovereign debt held by American bondholders.

China has little overseas debt, and a high national savings rate. In addition, most of the debt is state owned – state-controlled banks loaned funds to state-controlled firms – giving the government the ability to manage the situation.

On January 8, 1835, president Andrew Jackson paid off the entire national debt, the only time in U.S. history that has been accomplished.

Many people believe that much of the U.S. national debt is owed to foreign countries like China and Japan, but the truth is that most of it is owed to Social Security and pension funds right here in the U.S. This means that U.S. citizens own most of the national debt.

Thus, debt is continually paid down and new debt incurred, to be paid down by creation of new debt, ad infinitum. If total indebtedness as a percentage of the national economy does not grow, this can continue forever.

However, President Andrew Jackson shrank that debt to zero in 1835. It was the only time in U.S. history when the country was free of debt.

What country is in the most debt? ›

Japan has the highest percentage of national debt in the world at 259.43% of its annual GDP.

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.

We began accumulating it before our constitution was ratified. Debts incurred during the Revolutionary War period totaled a little over $75 million. President Andrew Jackson paid off the original national debt in 1835 because he didn't trust the paper money we issued. It was the only time it happened.

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.

Why History Shows the United States Will Not Grow Out of Its Debt. The United States is approaching record levels of debt. Debt held by the public totaled 97 percent of gross domestic product (GDP) at the end of 2022 and is on track to exceed its previous all-time high, which occurred just after World II, by 2029.

Foreign Holders of Federal Debt

In 1970, total foreign holdings accounted for $14.0 billion, or just 5 percent, of DHBP. As of December 2022, such holdings made up $7.3 trillion, or 30 percent, of DHBP. Of that amount, 54 percent was held by foreign governments while private investors held the remaining 46 percent.

Today, the Federal Reserve System is the single largest holder of U.S. government debt.