The US debt ceiling: basic facts

The traditional political battle between the Democratic Party led by President Joe Biden and the Republicans controlling the House of Representatives of the US Congress continues in the United States. The former call for raising the public debt ceiling, while the latter demand large-scale budget cuts.

According to the Constitution of the United States, Congress has the right to control the state budget. Borrowing allows the US federal government to finance various programs that lawmakers approved earlier. 

1. What is the borrowed money spent on?

According to the US Treasury Department, the lion's share of the US budget in 2022 was spent on social and defense programs. 8% of the budget was spent on servicing debt obligations. The use of loans allows the authorities to finance many large-scale programs and infrastructure projects that can repeatedly recoup investments in the long term.

2. How does the size of the US national debt change?

The US national debt has been steadily growing in recent decades. Experts note that over the past 20 years, all US budgets have been in deficit. The procedure for raising the debt ceiling, as a rule, always arouses increased interest, since it is inevitably accompanied by political crises in Washington. 

3. Who owns the US debt?

As of the beginning of 2023, 75% of the US national debt was owned by American citizens and companies. US debt obligations are traditionally considered one of the most reliable and secure financial instruments. Therefore, such investments attract investors interested in stability. 

Approximately 25% of the US national debt is owned by foreign states and private investors. As of January 2023, Japan, China, Great Britain, Belgium and Luxembourg had the largest packages of American debt obligations.

4. The scale of the US national debt

The United States today is the largest debtor in the world in terms of absolute amounts of public debt. However, if we compare the size of GDP and the size of debt, the picture is not so sad. As of 2021, the US debt was approximately 115% of GDP. For comparison, Japan's debt is about 220%, the UK's debt is about 100%.

5. How often has the debt ceiling been raised in the US?

Since 1960, the US Congress has raised the debt ceiling 78 times: 49 times under Republican presidents, 29 times under Democratic presidents. Under the presidency of Republican Ronald Reagan, the ceiling was raised a record 18 times, under Democrat Barack Obama – 11 times.