The United States has consistently held debt since its founding. Following the American Revolutionary War, the national debt reached over $75 million by 1791. Over the ensuing decades, this figure fluctuated, decreasing significantly in 1835 due to land sales and budget cuts, only to rise again with an economic depression. The American Civil War dramatically amplified the debt, pushing it from $65 million in 1860 to nearly $3 billion by 1865. This upward trend continued into the 20th century, with World War I contributing to a debt of approximately $22 billion.
More recently, events like the Afghanistan and Iraq Wars, the 2008 Great Recession, and the COVID-19 pandemic have triggered substantial increases in the national debt. The period from FY 2019 to FY 2021 saw a 50% surge in federal spending, largely attributed to pandemic-related expenses. Factors contributing to such sharp rises typically include tax cuts, economic stimulus packages, increased governmental spending, and reduced tax revenue resulting from unemployment.
A key metric for assessing a nation’s capacity to manage its debt is the debt-to-GDP ratio. This compares the national debt to the gross domestic product (GDP), providing a more comprehensive picture of a country’s financial health than the debt figure alone. It illuminates the debt burden relative to the overall economic output, indicating the nation’s ability to repay. In 2013, the U.S. debt-to-GDP ratio exceeded 100%, with both debt and GDP nearing $16.7 trillion.
