The US has a debt of $ 36 trillion- what does this mean and to whom does it belong?

On Sunday, an important US Congress committee approved President Donald Trump’s new bill to reduce taxes, which may be voted on by the House of Representatives later this week.

The bill extends the 2017 Trump tax cuts and can add up to $ 5 trillion to national debt, intensifying concerns after the recent downgrading of US credit rating from Moody’s on Friday, which cited $ 36.

The US has the highest national debt in the world and is facing increasing concerns about their long -term budget stability, According to Al Jazeera.

What is US debt?

Debt is simply the total amount that the US government owes to its lenders, which currently amounts to $ 36.2 trillion.

This accounts for 122% of the country’s annual economic production or gross domestic product (GDP) and increases by about $ 1 trillion every quarter.

The highest index to GDP was recorded during the pandemic in 2020, when the index reached 133%. The US is among the 10 countries with the highest GDP debt index in the world.

What is the debt ceiling and why does it continue to grow?

When the government spends more money than it receives, it creates a deficit.

To cover this deficit, the government borrows more money.

To ensure that lending is subject to legislative approval, the US Congress sets a limit on the amount that the government can borrow to finance existing liabilities, such as social security, health care and defense. This limit is known as a debt ceiling.

Once the ceiling is reached, the government cannot borrow more money unless Congress increases or suspended the limit.

Since 1960, Congress has increased, suspended or changed the terms of the debt ceiling 78 times, allowing the US to borrow more money.

The federal deficit by different presidents

The federal deficit is the amount that the government spends more than it receives over one year. A federal surplus would mean that the US is collecting more money than they spend.

The deficit increased abruptly during Trump’s first term, especially in 2020 during the Covid-19 pandemic, when the government incurred high expenditure, while tax revenue declined due to job loss.

That year, the deficit reached almost 15% of the total economy (GDP).

Under former President Bill Clinton, there was a federal surplus, the result of favorable economic conditions, such as the explosion of Dot-com, as well as increases in taxes that multiplied revenue.

Who owns the US debt?

Three -quarters of US debt, amounting to $ 36.2 trillion, about $ 27.2 trillion, are held inside the country, of which:

• $ 15.16 trillion ($ 42%) are held by private investors and US entities, mainly in the form of savings, mutual capital and pension funds bonds.
• $ 7.36 trillion (20%) are occupied by intra -government services and US trusts.
• The US Federal Bank holds $ 4.63 trillion (13%).

Among the individuals, Warren Buffett, through Berkshire Hathaway’s company, is the largest non -governmental US -state bond holder worth $ 314 billion.

Foreign investors hold the remaining one -fourth, worth $ 9.05 trillion (25%).

In the last 50 years, the share of US debt owned by foreign entities has been fivefold.

In 1970, only 5% belonged to foreign investors. Today, this figure has increased to 25%.

What does US high debt mean to the average American?

If the US government spends more on debt interest repayment, this can affect budgets and public spending, as it becomes more expensive for the government to maintain.

The government can increase taxes to generate more revenue to repay national debt, increasing the costs for the average citizen.

Debt increase could also lead to higher interest rates, making housing loans, car market loans and credit card debt more expensive.