How large is the current federal budget deficit? The deficit for FY 2018 (beginning October 1), is projected to be $440 billion.
How is the deficit related to our national debt? As mentioned above, the deficit is the difference between Congressionally authorized spending and available funds. That difference is borrowed by the U.S. Treasury. Borrowing to cover each year’s deficit adds to our national debt. However, it does not account for the whole increase in the gross federal debt, which we’ll explain below.
How large is the national debt? The current gross national debt (as of 8/11/2017) is $19.8 trillion.
What makes up the debt? There are two broad categories of the national debt:
- Debt held by the public ($14.4 trillion): This category is owned by individuals and entities other than the federal government of the United States. Foreign governments, corporations, the Federal Reserve System, mutual funds, state and local governments (including pension funds), private pension funds and banks own the majority of it. Roughly $6.2 trillion of the debt held by the public is owned by foreign governments. Our chief foreign creditors include Japan ($1.111 trillion), China ($1.102 trillion), Ireland ($195.8 billion and Brazil ($269.7 billion).
- intragovernmental debt ($5.4 trillion): The most succinct way to describe this is money that the federal government owes itself. In order to aid in funding deficits, in addition to issuing debt from the first category (debt held by the public), funds are borrowed from the Social Security Trust Fund and other government programs with an unspent balance. This practice began in the early 1980’s. Special treasury bills are issued with a stated rate of interest that will have to be repaid. The large balance owed is of some concern. Congress has borrowed a little less than $3 trillion from the Social Security Trust Fund over the years.
At the end of the Clinton Administration, in 2000, the gross federal debt stood at $5.628 trillion. At the end of the Bush Administration, in 2008, the gross federal debt was $9.986 trillion. At the conclusion of the Obama Administration, in 2016, that figure had risen to $19.539 trillion. In other words, not adjusted for inflation, during the two terms of the Bush Administration, we nearly doubled the total amount of all of the debt that our nation had accumulated from the foundation of our Republic to 2000. By the end of the Obama Administration, we were well on our way to quadrupling that amount.