The national debt of the United States is the combined debt accumulated by the US government, a sizable proportion of which is held by the public. It is a direct reflection of the economic stability of a country and the fact that it is at its highest point in US history has been great cause for concern.
But just how high is the US national debt, how does it compare to other countries and to whom do we owe all of this money?
Current National Debt
The US national debt exceeded $21 trillion in the Spring of 2018. This figure is a little hard for the average person to get their head around, but to put it into perspective, if you had a personal wealth of $21 trillion and spent it at a rate of $50 million a day without receiving any interest, you would need to live for over 1,100 years before that balance would dwindle to nothing.
You could buy the ten biggest companies in the world; every single professional sports franchise in the United States; over a million brand new Ferraris (at a sticker price of $300,000 each); and a few small islands in which to put them all, and you still wouldn’t even scratch the surface.
This debt costs the United States over $5,500 in interest every single second. And every year the interest generated on the US national debt is greater than than GDP of Qatar, and more than five times greater than the GDP of El Salvador.
And you thought Payday loans were bad.
US National Debt by Year
The US national debt entered the trillions for the first time in the early 1980s, and seemed to be at its highest under Reagan, but if you focus on the national debt in relation to the GDP (basically incomings vs outgoings) it was actually at its highest during the 1940s, when war and economic collapse caused it to rise to 119% of the GDP in 1946.
It was considerably lower in the 60s, 70s and early 80s, remaining between 31% and 35% from 1969 through to 1982, before jumping from the mid-80s onwards and hitting 50% by 1989. After period of relative stability, it jumped again in 2008 following another recession and it passed 100% of the GDP for the first time in 2013.
Where Does American Debt Come From?
Money is owed to the federal government and to other countries and corporations. The federal government amount covers retirement funds, disability payments and social security, among other things, while other domestic debt is owed to banks, local government, insurance companies, pensions and other such corporations.
Everything from increased spending (such as an increase in military spending because of foreign conflict) to decreased taxes can impact on the US national debt. In fact, tax cuts and military spending have accounted for a signifiant rise in the national debt over the last couple decades.
US National Debt Compared to Other Countries
The US has the highest debt if we focus on the pure monetary value, but considering the sheer size of the country it would be unfair to do so. To get a better idea of the scale of any country’s debt you need to calculate it based on a percentage of their GDP. For instance, if a country's GDP is $1 trillion and their national debt is $1 trillion, then it is 100% of their GDP.
When we do this, the US is second on the list of total national debt behind Japan, which has more than 230% to America’s 106%.
The Chinese national debt is considerably lower than both the USA and Japan, standing at just over 40% of their GDP at around $4.5 trillion.
Which Countries Does the US Owe Money to?
The US debt to China is over $1.2 trillion, as they have invested a lot in the US like many other developed nations. Japan also account for more than $1 trillion of that debt and the US also owes to Brazil, Belgium, Taiwan and Switzerland, among many others.
The US National Debt by President
This is a hot topic, as political opponents enjoy talking about the amount of national debt gained by their predecessor and it’s also often the first complaint on the lips of anyone speaking out against that president. But whether you support them or despise them, you can’t argue with figures. These are the presidents who have impacted the most on the US national debt, whether through fault or misfortune.
Highest: Barack Obama
If we focus purely on the dollar amount and not the percentage of GDP, then the national debt grew the most under former president Obama. He added close to $8 trillion over his two terms, which was by far the biggest monetary amount and the fifth amount in terms of percentage of total national debt.
For the average American, a lot of the increases were positive. Tax cuts, improved unemployment benefits and public work projects all helped tens of millions of Americans, but they also added a sizable chunk of money to the US national debt. He was also one of the many US presidents to increase defense spending, which added up to $800 billion to the figure.
And, of course, Obama also served during the 2008 recession, during which there was a significant downturn in the fortunes of many Americans.
Second Highest: George W. Bush
Bush added nearly $6 trillion to the US national debt, the second highest dollar amount of all and the fourth highest percentage increase. A significant proportion of this was the result of the so-called “War on Terror“, which followed on from the 9/11 attacks and would lead to two wars and some questionable policies. The highly controversial Iraq War cost over $800 billion, while military spending was increased by a further $700 billion.
Bush also introduced tax cuts and suffered through the 2001 recession.
Third Highest: Franklin D. Roosevelt
This war-time leader may have only increased the debt by $236 billion, but in terms of a percentage increase it was the highest in history. He also took the US national debt to the highest it has ever been in relation to the GDP. Of course, this was during the biggest global conflict that the world has ever seen, a time when tens of millions of Americans were fighting overseas, when billions were being spent on tanks, aircraft and bullets, and when the workforce was seriously depleted.
In fact, between the years 1949 and 1945, when the United States entered the war and saw it to its conclusion, over $209 billion was added to the GDP.
The President that Helped the National Debt the Most
Bill Clinton is typically cited as being one of the best presidents in US history when it comes to the national debt. The debt did grow under his leadership and percentage wise it was actually a very similar growth as experienced under Obama, but the debt was smaller at the time so the total amount was much smaller as well.
It’s not really fair to judge a president on the national debt because many of the policies that the public consider as beneficial are actually detrimental to the national debt and it’s hard to balance the two, especially during times of global conflict and financial difficulty. That’s actually the reason why the national debt was at its lowest during the 19th century, when America was neither the biggest nor the richest country in the world.
The national debt is high and it does need to come down, there is no doubt about that, but a growing national debt is not necessarily a sign of a doomed country. Look at Japan. They are one of the richest countries in the world, despite the fact they were on the losing side of the world’s biggest conflict, during which they had two nuclear bombs dropped on them and were forced to pay all kinds of reparations. They managed to prosper and they continue to do so.
It will be the same story with the United States.