Understanding the U.S. National Debt: A Historical Perspective

In theory, governments should offset deficits during economic downturns with surpluses in prosperous times. In reality, the federal government frequently runs a deficit. Currently, the national debt is nearing $40 trillion. To understand this progression, we must trace back to 1962.

1962

In the 1960s, most federal spending was discretionary. Entitlement spending, like Social Security, was relatively minor.

1966

Medicare and Medicaid began providing benefits.

1973-1975

A recession occurred, causing the deficit to increase sharply.

The 1980s

A defense buildup, considered discretionary spending, and reduced tax rates led to higher deficits during this decade.

1992

Defense spending decreased following the end of the Cold War.

1998

The government experienced a few years of surplus due to strong economic growth, high revenue, and controlled spending.

2002

Following a recession, tax cuts, and post-September 11 conflicts, deficits reemerged.

2009-2011

The Great Recession caused deficits to soar.

2015

Economic recovery and controlled discretionary spending reduced the deficit to its lowest point in recent times.

2020

The COVID-19 pandemic and emergency stimulus spending led to record deficits.

2026

Deficits remain high due to rising entitlement costs and interest payments. The debt is projected to reach 101 percent of GDP by 2026.

Illustration by Kyle Ellingson; design and development by Youyou Zhou