National Debt Clock | Peter G. Peterson Foundation
WHAT IS THE NATIONAL DEBT TODAY?
WHY IS THE NATIONAL DEBT SO HIGH?
When the federal government spends more than it takes in, we have to borrow money to cover that annual deficit. And each year’s deficit adds to our growing national debt.
Historically, our largest deficits were caused by increased spending around national emergencies like major wars or the Great Depression.
The coronavirus crisis has accelerated an already unsustainable fiscal trajectory, both because of its devastating effect on the economy and the necessary legislative response. Moving forward, it will be critical for America’s leaders to address our rising debt, and its structural factors, which are described below.
THREE MAJOR DRIVERS OF OUR GROWING NATIONAL DEBT
DEMOGRAPHICS
America is undergoing significant demographic change. Our society is aging as the large baby-boom generation begins to retire — 10,000 will turn 65 every day through 2030. Moreover, people are expected to live longer, on average. That is great news, but it means that we must prepare for the financial needs of longer retirement.
These huge demographic trends put increasing pressure on the federal budget — and in particular on vital programs that serve older and vulnerable Americans like Social Security, Medicare, and Medicaid.
PROJECTED SENIOR POPULATION (65+)
RISING HEALTHCARE COSTS
In many ways, healthcare is the most important issue for our nation’s fiscal and economic future. It represents nearly one-fifth of our entire economy, and it is the second fastest-growing part of the budget.
The U.S. healthcare system is the most expensive in the world, but we do not really get what we pay for. We spend over twice as much on healthcare as other advanced nations, but our system does not provide better overall health outcomes. Improving the performance of the U.S. healthcare system will not only improve Americans’ lives, it will help stabilize our fiscal and economic outlook.
HEALTHCARE COSTS AROUND THE WORLD
INADEQUATE REVENUES
It would be one thing if our tax code was designed to fund all the promises we are making. But it is not.
The U.S. tax system does not generate enough revenues to cover the spending policymakers have enacted. This rapidly growing imbalance between revenues and spending leads to higher and higher annual deficits, and the result is an increasing national debt balance.
REVENUES VS. SPENDING
WHAT IS THE NATIONAL DEBT COSTING US?
As the debt grows, so does the interest we pay.
Similar to a home or car loan, interest payments represent the price we pay to borrow money. As we borrow more and more, federal interest costs rise and compound. Rapidly growing interest payments are a burden that hinders our future economy.
Interest will become the fastest growing part of the federal budget.
In ten years, our interest will nearly double from where it is today.
WHY DOES THE NATIONAL DEBT MATTER?
What makes America strong is our willingness to build and leave a better future for the next generation. Unfortunately, our growing debt is doing the opposite.
America faces many challenges including rising inequality, unaffordable healthcare, a changing climate, failing education, crumbling infrastructure, and unpredictable security threats. To address these challenges we will need significant resources. Every dollar that goes toward interest payments means less resources available to build a stronger, more resilient future.
Being irresponsible with our budget is simply not fair to our kids and grandkids, who will inherit this debt.
The vast majority of Americans believe that addressing our debt should be a priority.
82% of voters say they want the president and Congress to spend more time addressing the debt, and 80% say their level of concern has increased over the last few years.
WHAT CAN WE DO?
We all have a stake in America’s future. Let your lawmakers know that you care about managing our high and rising national debt.
