Is the National Debt Finally Going to Be a Problem?

“As President Joe Biden unveils his own ambitious spending plans, it is worth asking if the national debt is finally going to have its moment.”

In normal times, the national debt is something of a losers’ issue—a political cudgel used by the party currently out of power (or ardent libertarians, who are always out of power) to bludgeon their opponents. The other group that gets fired up about the national debt is economists, who contentiously debate its impact. Other than that, it mostly sits in the background, quietly accumulating.

These, however, are not normal times, and this permeating sense of exceptionalism extends to the national debt, as much as to anything else.

Since the 2008 financial crisis, the national debt has grown rapidly. As a percentage of U.S. gross domestic product, it has nearly tripled. One year ago, former President Donald Trump signed the $2.2 trillion CARES Act into law, bringing the 2020 deficit to a massive $3.1 trillion and reinvigorating discussion over the size of the national debt. As President Joe Biden unveils his own ambitious spending plans, it is worth asking if the national debt is finally going to have its moment.

National Debt 101

The national debt is the money the United States federal government owes—either to various agencies within the federal government or to “the public,” which in this case is composed of individuals; other governments, including foreign nations as well as states and municipalities; and private institutions, such as insurance companies, banks, businesses, and more.