What is the country’s debt?
Public debt, federal trust funds, and government accounts are all included in the national debt, which is the total amount of debt held by the federal government. As the overall amount of the government’s deficit, it represents both the debt the government owes to itself and to other parties. The public debt, gross federal debt, and debt subject to limit are the three categories used to analyze the total national debt. The money raised to finance activities and programs, along with money borrowed from outside lenders, is known as public debt. In addition to adding federal trust funds and governments, the total federal debt also includes the public debt. Similar to gross federal debt, debt subject to limit only comprises debt issued by the Treasury and Federal Financing Bank.
The national debt exceeded $26.5 trillion as of July 2020. This amount, which is 123% of the country’s annual economic production, works out to $80,422 for each American citizen. Due to the financial strain caused by the COVID-19 pandemic, the debt-to-GDP ratio as of June 2020 was 120.5%.
What are the different debt clocks and what do they indicate?
US National Debt Clock
The total amount of federal government debt that is still unpaid is shown on the US National Debt Clock. The public debt, which includes loans to individuals, companies, and foreign governments, is displayed on the second half of the clock in the form of Treasury bills, notes, and bonds. Federal programs like Social Security are included in the other third of the debt, which represents what the government owes to itself.
Medicare and Medicaid, Social Security, the national debt’s interest payments, and military make up the bulk of the budget. The first two things are a component of the mandated initiatives that must be paid for by federal funds, according to the law. To give you a sense of how much more the United States spends than other nations, consider that the U.S. spends more on its defense budget alone than China, India, Russia, Saudi Arabia, France, Germany, the United Kingdom, Japan, South Korea, and Brazil put together.
The Debt Clock also provides demographic data about the nation, which is useful in determining where program funds may go. A country with a population of over 329 million has 60 million Medicare beneficiaries and 79 million Medicaid recipients. Furthermore, 54 million retirees are currently pursuing Social Security benefits.
State Debt Clock
State debt clocks also track demographics, including the total population, the number of people using food stamps, and the unemployment rate, in addition to the state’s own GDP, debt, revenue, and spending. These clocks operate in addition to the federal debt clock. On the U.S. National Debt Clock website, this resource is located in the upper right corner.
The state with the biggest economy is California, which ranked fifth in the world in 2018. With an average debt of $870 per citizen, Iowa has the lowest debt per capita in the US. To comprehend how much borrowing is possible in relation to a state’s population, it is crucial to understand demography and debt. The quality of life for locals is impacted by these borrowed funds, which enable statewide services.
World Debt Clock
The World Debt Clocks provide perspective on how the United States’ debt stacks up against that of other countries. To put that into perspective, the U.S. has a larger national debt than China, Japan, and Germany put together. The U.S. public debt ratio was 100.67% as of July 2020, while the external debt to GDP ratio was 120.32%.
World debt clock is crucial to comprehend how various economies throughout the world are doing. It’s critical to comprehend global relationships in a world that is increasingly interconnected. The fact that numerous nations owe the United States money is a crucial one. Other nations are able to maintain their economies thanks to foreign sovereign debt. Selling Treasury bonds and notes allows the United States to aid in the economic growth of other nations.
Student Loan Debt Clock
The Student Loan Debt Clock shows the total amount of government and private loans that students have taken out to date to pay for their higher education expenses. Every second, the amount of student debt in the United States rises by $2,853.88. The student loan debt total is $1.7 trillion as of July 2020. As the average cost of attending college rises, need-based grants are not keeping pace with the increase in loan amounts.
The Student Loan Debt Clock displays several student loan debt-related items in real time. As of July 21, 2020, $91 million had been paid toward student loan debt reduction, but $153 million had been borrowed in new student loans. Over $369 million was spent on various educational expenses by full-time students, but only $161 million was provided by the federal government.
The Peter G. Peterson Foundation National Debt Clock
The National Debt Clock, maintained by the Peter G. Peterson Foundation, keeps track of the total amount of national debt and offers more information on its causes, consequences, and significance. The national debt is regarded as a top priority concern by 92% of Americans, although few are aware of its complexities.
The rising expense of health care, changing demographics, and insufficient tax revenues are the main causes of the nation’s growing debt. In order to cover their retirement expenses, more money will be required as the baby-boomer generation approaches retirement age. In addition to these costs, the American health care system is one of the best funded in the world. Even still, health outcomes are not superior than those of other nations. Spending and revenue are not in line with one another. The United States’ annual revenues cannot keep up with its expenditures, particularly those related to the national debt interest, which will soon surpass expenditures on defense and education.
Why Does This Matter?
The cost of interest is continuing to climb, thus a significant portion of government spending may be used to pay it off. This implies that financing for development initiatives like infrastructure and education may decrease as an increasing amount goes toward interest payments. Additionally, higher interest rates make it difficult for individuals to make private investments, which has an impact on economic growth. It may be more difficult for people and businesses to obtain funds and investments when the interest rate is high.
The national debt can have a significant impact on people and their quality of life in addition to the economy and its expansion. Businesses raise the cost of goods and services as investments become more challenging to secure in order to balance debt servicing commitments. Long-term investment returns may be impacted by this. A family of four’s average income is expected to drop by $16,000 over the next thirty years if debt growth continues, which could result in higher costs for goods and services. This implies a decrease in the amount spent on needs and extras. A rise in debt may also result in higher interest rates, which will raise the cost of homes, autos, student loans, and business loans. In addition, the government may need to slash spending on a number of programs, which might have an impact on people who depend on Medicare or Social Security for their daily needs.
About 49 million Americans had student loan debt in 2019. The GDP of 175 nations is greater than the total amount of student debt in the United States. The problem of student debt affects people from all backgrounds and ethnicities, with an average level of student debt of $30,000. For students who want to pay off their student debt, rising student debt, high interest rates, and economic volatility might be problematic. The rising national debt is probably having a negative impact on salaries and job security.
Do you want to learn more about how the debt will impact our financial future? View our graphs to verify this for yourself!
Can You Help?
It’s crucial to be aware and proactive as the national debt keeps rising. A program called Up to Us encourages young individuals to participate in on-campus activities that teach them about fiscal policy. Participate by organizing an event, going to a program, and meeting other like-minded people.