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The measure of Federal debt that closely reflects the Federal government’s true debt obligations is “debt held by the public,” defined as gross Federal debt less the debt held in Federal government accounts. As the chart shows, following World War II, Federal debt held by the public was 111% of Gross Domestic Product (GDP) in 1946. It then fell steadily as a percent of GDP to 23.9% in 1974. From 1974 to 1993, debt held by the public rose from 23.9% to 50.2% of GDP. By 1996, debt held by the public had declined to 49.9% of GDP.
Some regard the Federal debt as a sustainable development problem because of the constraints it may place on future generations. But unlike personal and corporate debt which limit future spending by individuals and corporations, the greatest concerns about public debt relate to distributional issues and to the desire to demonstrate fiscal responsibility. For every debt owed by one institution, there is an equal asset on the books of other institutions or individuals to whom the debt is owed. With Federal debt, the burden of financing the debt is shared across the American population, while the benefits accrue only to those who can afford to hold the bonds (both in this country and abroad).
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http://www.sdi.gov/indicators/lc_debt.htm Last Modified: May 13, 2002 |