Historical Overview

The federal government has carried debt throughout virtually all of U.S. history. As part of Alexander Hamilton's plan for strengthening the financial credit of the post-Constitution nation, the federal government assumed the debt incurred during the Revolutionary War and the period under the Articles of Confederation.

Since that time, federal debt as a share of the nation's income has varied. Historically, the U.S. government has run up deficits during wars and recessions, but then debt has subsequently declined. For example, debt as a share of the economy peaked just after World War II, but then fell. In recent years, however, sharp increases in the debt have led to heightened concern about the long-term sustainability of the federal government's fiscal policies.

Source: GAO analysis of data from the Congressional Budget Office (CBO), The 2013 Long-Term Budget Outlook, September 2013 (Supplemental Data).

Notes: For years 1797-1939, year refers to calendar year. For years 1940-2012, year refers to fiscal year. CBO notes they estimated gross domestic product (GDP) from several sources. Data from 1929 onward reflect revisions to the estimates of GDP that the Bureau of Economic Analysis released in July 2013.

Federal Debt Held by the Public as a Share of GDP data: txt pdf

Discussion and debate about fiscal (spending and tax) policy and about debt can benefit from consistent understanding of basic terms and definitions. This section provides a broad range of analytical information about federal debt including its relationship to the budget, ownership of the debt, debt management, and key policy considerations. In some cases, information may be presented differently on the consolidated financial statements of the United States government because of different budgetary and financial reporting methods. The consolidated financial statements and guide to it can be found at http://www.gao.gov/financial.html.

For easy reference, key terms are underlined with a dashed line; place your cursor over the word to view the definition.