When the federal government spends more money than it collects in taxes in any given fiscal year (the government\u2019s fiscal year runs from October 1 to September 30), there is a deficit. The opposite of a deficit is a surplus.<\/p>\n
To fund its operations when there is a deficit, the government borrows money by selling Treasury notes, bills, bonds, and other securities to investors, paying interest based on the interest rate environment at the time the security is issued. The interest owed to these investors adds to each year\u2019s spending deficit (if any) and further increases the national debt over time.<\/p>\n
In the past 50 years, the U.S. has run a deficit 46 times. The last U.S. budget surplus was in 2001. In 2024, the deficit was $1.83 trillion, the third-highest on record. The highest deficit was in 2020 during the pandemic, when it was $3.13 trillion.2<\/sup><\/p>\n There are several reasons for the ballooning national debt. One reason is previous tax cuts and pandemic spending. Another major reason is the increasing cost of Social Security and Medicare, two popular programs that serve a growing demographic of older Americans and make up the two biggest slices of the federal budget pie.3<\/sup> Cutting spending on these programs is not politically popular, though in theory, future benefits could be trimmed. Military spending also consumes a significant portion of the federal budget.<\/p>\n A category of spending that can\u2019t be cut is the interest the federal government must pay to investors who have purchased Treasury securities, which is consuming an increasing share of the federal budget. This is sometimes referred to as \u201cservicing the national debt.\u201d As of September 2024, $1.13 trillion went toward maintaining the debt, which was 17% of total federal spending in fiscal year 2024.4<\/sup><\/p>\n Comparing a country\u2019s total debt to its gross domestic product (GDP) is typically a better way to gauge a country\u2019s ability to pay down its debt than just looking at the raw debt number. For fiscal year 2024, the U.S. debt-to-GDP ratio was 124%. This was just under the record 126% in 2020.5<\/sup> According to the nonpartisan Congressional Budget Office, based on current spending and revenue projections, the debt-to-GDP ratio is projected to reach 179% by 2054.6<\/sup><\/p>\n Clearly, Congress has work ahead to better balance U.S. revenue and spending.<\/p>\n Projections are based on current conditions, subject to change, and may not come to pass.<\/em><\/p>\n 1\u20135) fiscaldata.treasury.gov, 2024\u20132025 This information is not intended as tax, legal, investment, or retirement advice or recommendations, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek guidance from an independent tax or legal professional. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Broadridge Advisor Solutions. \u00a9 2025 Broadridge Financial Solutions, Inc.<\/p>\n","protected":false},"featured_media":1471,"template":"","meta":{"_acf_changed":false},"newsletter-category":[37],"class_list":["post-1470","newsletter","type-newsletter","status-publish","has-post-thumbnail","hentry","newsletter-category-april"],"acf":[],"yoast_head":"\nWhy is the national debt so high?<\/h2>\n
\n6) Congressional Budget Office, 2024<\/p>\n