What is Total Public Debt?

Published by Thomas Herold in Accounting, Economics

'Total Public Debt' is explained in detail and with examples in the Economics edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.

Total public debt refers to all of the national debt which the United States owes to its various creditors and other agencies within the government to whom it owes money. This amount grows in years where there are deficits as the government spends more funds than it receives in taxes.

The aggregate national debt shrinks in surplus years as the federal government receives a greater amount of money that it spends. Every year of the Obama administration has been a deficit year that increased the debt. As of the end of Fiscal 2016, the government’s total public debt amounted to $19.7 trillion.

The total public debt includes all money owed to Americans and foreigners as well as other agencies within the government. As such, the gross national debt for the country is made up of two components. The first of these is marketable debt which the public and foreign countries hold. This includes instruments such as Treasury bills, bonds, and notes.

Investors regularly buy and sell this debt on the bond markets. Any investor who is not a part of the federal government is considered to be a part of this class of debt. This means T bills held by consumers, companies, banks and financial institutions, the Federal Reserve, and local, state, and foreign governments are all included in this category of debt. As of July 29, 2016 this portion of the debt amounted to $14 trillion.

The other category of the total public debt is the debt which other government accounts hold. This is also called intra-governmental debt. These debts are also comprised of Treasuries, only these can not be bought and sold. This category of debt is like IOUs kept in federal government administered accounts. The country owes it to beneficiaries of programs, as with the Social Security Trust Fund or the Medicare Trust Fund. These government accounts once had surpluses and invested them over time in Treasury securities. The amount which they are owed includes principal plus interest earnings. On July 29, 2016, this category of the total public debt equaled $5.4 trillion.

Together, the two categories which make up the total public debt equaled $19.4 trillion on the July 29, 2016 date. This represented fully 106% of the prior twelve month national GDP for the United States. Foreigners held $6.2 trillion worth of the debt at this point equivalent to about 45% of the debt which the public held or 32% of the aggregate public debt. The largest foreign holders proved to be China and Japan. As of May 2016, China owned about $1.25 trillion while Japan held $1.15 trillion worth of U.S. government debt.

Usually, the government’s debt goes up as and when the government spends monies on entitlements, interest on the debt, and budgetary programs. It similarly decreases as taxes and other monetary receipts accrue. Both categories change throughout the months of the fiscal year.

The government does not in practice issue Treasury debt itself on a day by day basis as it spends money. Instead, this is issued or redeemed according to the government’s money management operations. The total amount of money which Treasury is authorized to borrow is restricted by the debt ceiling of the United States. Congress conveniently lifts this every time the ceiling is hit.

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The term 'Total Public Debt' is included in the Economics edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.