NEW ORLEANS — The United States National Debt is about $31.46 trillion. But what does that really mean, and who do we owe all that money to?
First: this is nothing new. The United States has had debt since it was founded.
Just like with your credit card bill, national debt accrues when we can’t pay off the bill for programs and services every month because spending outweighs revenue.
The government tries to mitigate that by selling securities – like bonds – and paying interest to those who purchase them.
Last year alone, the government paid $476 billion dollars just in interest. That number made up nearly 2% of our GDP.
And a lot of people ‘own’ our country’s debt.
About 60% is owned by public investors. Many are foreign countries like Japan, China, and the UK, according to the Peter G. Peterson Foundation.
Owning about 20%, according to the Pew Research Center, is a different arm of the Federal government: the Federal Reserve System.
Now, to the debt ceiling. Congress set the maximum amount of debt that the federal government can have at $31.4 trillion. That means we’re pretty much there.
Surpassing that amount would be a disaster for the economy, because the government can’t spend any more, and bills will go unpaid.
That’s the problem representatives in Washington have been trying to solve, and where they *think they finally have an agreement before the deadline.
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