September 13, 2013

Nation’s debt has nearly reached its $16.7 trillion ceiling


The federal debt ceiling is nearly $16.7 trillion.

With the Syrian crisis at least temporarily off the federal government’s front burner, Congress is turning its attention back to fiscal issues — most critically, the looming fight over raising the ceiling on federal debt. In Congress, the issue now has become entangled with a stopgap spending measure aimed at averting an Oct. 1 government shutdown, Republican efforts to defund the Affordable Care Act, proposed changes to Social Security and other “entitlement” programs, and a bipartisan effort at overhauling the tax code.

As of the end of August, according to the Treasury Department, government debt was about $25 million shy of the official debt limit of $16,699,421,095,673.60. The government will run out of fiscal wiggle room by mid-October, Treasury Secretary Jacob Lew has warned, meaning that without a change in the law it won’t be able to issue any more debt to keep itself running.

About 28% of the total debt ($4.75 trillion as of the end of August) is held by the Social Security and Medicare trust funds and other governmental accounts; the rest (about $11.95 trillion) is held by the public in the form of various sorts of Treasury securities.

debtGDPThe intra-governmental share of the debt has risen steadily since 1982, as Social Security took in more in payroll taxes than it paid out in benefits and invested the surplus in Treasury bonds. The publicly held  portion of the debt is affected by annual budget deficits or surpluses; that portion shrank slightly during the four fiscal years (1998-2001) that the government ran surpluses, but has more than tripled since then, from $3.3 trillion to $11.95 trillion.

Beyond the raw dollar figures, an arguably more useful way to look at the national debt is as a percentage of gross domestic product. Based on the latest GDP estimate the debt currently stands at just over 100% of gross domestic product, its highest level since just after World War II. (It was 55.6% of GDP at the end of fiscal 2001, according to a useful primer prepared by the Congressional Research Service.) That gives the United States one of the higher debt-to-GDP ratios among the 30 developed economies tracked by the Organization for Economic Cooperation and Development, though not the highest: That title goes to Japan, whose public debt is more than twice its GDP.

A Pew Research Center survey in May gave a hint at the difficult negotiations that likely lie ahead. Asked whether it was more important to take steps to reduce the national debt or keep Social Security and Medicare benefits as they are, 53% of respondents chose Social Security and Medicare, while just 36% chose the debt. (A similarly worded question on the deficit, rather than the debt, yielded almost identical results.)

Category: Daily Number

  1. Photo of Drew DeSilver

    is a senior writer at Pew Research Center.

1 Comment

  1. ThoseWhoServe3 years ago

    It appears that the inmates (Tea Party and Republicans) are running the asylum (House of Representatives) again and are talking once more about shutting down the government by refusing to increase the federal debt limit if the President does not accept the defunding of Obamacare.

    Accordingly, the President should simply advise the Congress that the Administration will not give in to blackmail attempts and advise Americans they may need to do a little planning if the Republicans follow through on with their spoiled three-year old child tantrum.

    Some of the ways a Republican shut-down of the Federal Government affects individual Americans include the following:

    1) The heat, water, electricity, telephone, Internet, and sewage services to the U.S. Capitol will be shut off due to the government shut-down; i.e. no pay, no services.
    2) All airports will be closed to comply with the shut-down of the air traffic control system.
    3) All ports of entry, including people crossings, vehicle crossing, and airports will be closed to comply with the shut-down of the Immigration and Customs Enforcement services.
    4) No persons, U.S. citizens, legal resident aliens or foreign nationals can legally enter or leave the United States, and no products can be brought into the country.
    5) The U.S. Armed Forces and tens of thousands of support contractors in Iraq, Afghanistan, along with all military and support personnel and dependents serving overseas will be returned to the U.S. shores prior to the government shut-down.
    6) The 350 ships in the U.S. Navy will return to U.S. shores prior to the government shut-down.
    7) All military and government aircraft will be returned to U.S. bases and grounded.
    8) There will be no weather forecasts from NOAA, no rescues by the U.S. Coast Guard, and no responses to emergencies such as wild fires on federal lands or offshore oil spills.
    9) All medical service providers, including hospitals, labs, doctors, etc. will have to notify patients to be prepared to pay cash.
    10) Employees and retirees will have to notify their employers and pension plan administrators processing payrolls to stop withholding of Federal taxes or FICA payroll taxes since the government is not providing any services.
    11) Alaska, California, Louisiana, Texas, Mississippi will be notified by the Federal government that they will not be receiving any oil or gas revenues or royalties from off-shore drilling, or drilling on Federal lands.
    12) U.S. hedge funds, which hold most of their liquid assets in U.S. Treasury securities, will cease almost all trading activity or investment in new businesses due to the inability to redeem U.S. Treasury securities. Similarly, foreign hedge funds that hold substantial amounts of U.S. Treasury securities will reduce trading activity and investment in new businesses due to the inability to redeem U.S. Treasury securities.
    13) In addition to stopping the addition of new beneficiaries of Social Security retirement and disability payments, all retirees receiving pensions will have to be notified that pension payments may be reduced because of difficulties by the Social Security Trust Fund and pension funds experienced with redeeming the short and medium U.S. Treasury securities in their portfolios.
    14) All Americans will have to be notified that money market checking accounts can no longer be used because the overnight and short term U.S. Treasury securities backing their deposits cannot be redeemed.
    15) All Americans purchasing or refinancing a home will have to be notified that there is no market for the mortgages being securitized with the shut-down of FNMA and GNMA activities.
    16) All business activity may have to be conducted in cash because the all of the banking debits and credits between banks are processed by a federally funded government agency that will be closed.
    17) All personal financial activities by individual consumers may have to be conducted in cash because the all of the banking debits and credits between banks are processed by a federal government agency that will be closed.
    18) Prepare all foods very carefully because there will be no inspection of any food products.
    19) Stay in good health because there will be no oversight of the manufacturing, quality, or efficacy of any pharmaceutical, food, meat, poultry, fish, or consumer products.
    20) Be prepared for delays in delivery of the U.S. mail.

    Anarchy reigns! It appears the Tea Party and Republicans may get what they wish for.