Definition
It accumulates when federal borrowing exceeds repayments over time. It includes debt held by the public and intragovernmental holdings.
Political Dictionary
National Debt
The national debt is the total amount the federal government owes to creditors.
Why It Matters
The debt affects interest costs, fiscal flexibility, financial markets, and intergenerational policy debates.
How It Works
The Treasury issues securities to finance obligations approved by law.
History
Federal debt has grown during wars, recessions, emergencies, and periods of persistent deficits.
Example
Investors may buy Treasury bonds that finance federal borrowing.
Common Misconceptions
- The national debt is the same as the annual deficit.
- The government owes all debt to foreign countries.
- Paying interest immediately eliminates the principal.
Related Terms
Related Topics
See Also