Economists, investors, and lawmakers are again raising alarm bells about the U.S. national debt. Years of elevated budget deficits, exacerbated by massive federal spending totaling more than $34.59 trillion in 2024, U.S. federal government debt is now at its highest percentage of gross domestic product (GDP) since World War II. Equally alarming to many experts is the debt’s unsustainable trajectory, as spending is projected to continue outpacing revenues under current law.

Today, the national debt is almost the same size as the entire U.S. economy, and the debt is on track to double within the next thirty years. Some economists say that could expose the country to a number of dangers, including a budget crisis, rising interest rates, greater economic instability, and a diminished global leadership role. Reducing the debt will require Congress to make politically difficult decisions to either curb spending, raise taxes, or both. Other people say the United States can safely afford to continue borrowing at present levels because it pays relatively little interest due to its unique position in the global economy.

The United States has run annual deficits spending more than the Treasury Department collects in taxes almost every year since the nation’s founding. The deficit is a yearly measure, while debt refers to the cumulative amount that the government owes. Measuring both as a proportion of GDP is a standard way of comparing spending over time, because this method automatically adjusts for inflation, population growth, and changes in per capita income.

The end of World War II, after which the United States emerged as a global superpower, is a good starting point from which to examine modern debt levels. Defense spending during the war led to unprecedented borrowing, with the debt skyrocketing to more than 100 percent of GDP in 1946.

The federal budget is divided between mandatory and discretionary spending and interest payments on the debt. Most of the budget goes toward mandatory spending, which is automatic unless Congress alters the legislation authorizing it. This spending primarily consists of entitlement programs, such as Social Security, Medicare, and Medicaid. Other major discretionary outlays, including health, education, veterans’ benefits, and transportation, each made up less than $150 billion.

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