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  • Writer's pictureHarry N. Stout

207- Your $796,000 Share of the National Debt

The amount of our national debt and the interest we pay on it has a profound impact on the federal budget and the income taxes you pay or will pay in the future. Have you seen how much debt we have accumulated on the US government’s credit cards? How much does it amount to for each household? If this were your household, you would be trembling. The reality of our debt situation is sobering and will have a major impact on the future of your money matters. The problem for most people is that they do not know the reality of our national debt situation. In this post, I will try to help you better understand what we owe.

We see reports that say the total national debt is about $28 trillion but it is much, much more. Over four times as much. Many of our elected leaders don’t bother to count all the financial promises they have made. Knowing this situation is important for your financial education. For at some time in the future we are going to need to make good on all this debt. To see a great visual image of our debt situation just go to the National Debt Clock. To have the cash needed to pay the future debt service a combination of tax increases, budget cuts or new borrowings will be needed to balance the national check book.

The Full National Debt Picture

As you drill down on the numbers you will find that the U.S. national debt is closer to $123 trillion, more than four times what the Treasury Department is reporting. The federal government has $5.95 trillion in assets and $129.06 trillion worth of bills resulting in a $123.11 trillion shortfall, or a debt burden of $796,000 per U.S. household as of September 30, 2020 based on the latest available audit.

The analysis, “Financial State of the Union 2021” is based on the latest available audited Financial Report of the U.S. Government for the fiscal year ending Sept. 30, 2020. According to the federal report, if current laws and policies don’t change, the increase in future debt will grow faster than our economy as measured by GDP.

TIA found that the federal government’s overall financial condition worsened by $9.84 trillion in 2020, resulting from stimulus funding and costs imposed on state and local governments by lockdowns.

The official Treasury Department figure of $28 trillion shown on the debt clock doesn’t account for the short- and long-term economic costs of state shutdowns in 2020 or those that are still ongoing, TIA notes. It also doesn’t include the large amount the government owes in unfunded Social Security and Medicare entitlement benefits.

TIA’s total federal debt calculation includes $55.12 trillion in unfunded Medicare benefits and $41.20 trillion in unfunded Social Security benefits.

One reason why the Treasury Department excludes unfunded entitlement benefits from its debt calculation is because it claims recipients have no right to future payments; they only have rights to claims through current entitlement laws, TIA notes. Additionally, government documents indicate that laws to reduce or stop future benefits can be passed at any time by Congress. In my view this position does not reflect political reality. In my opinion, not paying Social Security benefits or eliminating Medicare benefits would be political suicide for whatever party took that action.

After Medicare and Social Security, the next greatest debts the government owes are publicly held debt ($21 trillion), military and civilian retirement benefits ($9.4 trillion) and other liabilities ($2.25 trillion).

Unlike many state governments that have Rainy Day Funds or cash reserves, the federal government resorts to printing and borrowing more money or raising taxes instead of cutting spending. “If the federal government was properly prepared for a crisis with a true rainy-day fund, it would not have had to borrow money,” the report states.

Eighty percent of the government’s revenue comes from individual income and withholding taxes. Excise, estate, gift, and other taxes account for 11% of revenue and corporate taxes account for 9%.

Federal spending by specific category includes 23% on Defense and Veteran’s Affairs,16% on Health and Human Services (Medicare/Medicaid), 16% on Social Security, 5% on interest on the national debt, and 2% on education.

New Spending Proposals

The debt figures show above do not show the impact of the recently passed stimulus bill and the Biden Administration’s proposals on infrastructure and social spending. These programs are called:

  • The American Rescue Plan (legislation passed with a price tag of $1.9 trillion.

  • The American Jobs Plan (legislation proposed with a price tag of $2.3 trillion with new revenue sources proposed to pay for the program)

  • The American Families Plan (legislation proposed with a price tag of $1.8 trillion with new revenue sources proposed to pay for the program)

As you can see, Washington is looking to add large amounts of new spending some of which will add to our national debt.


In personal finance, I write about the need to control spending, carefully manage debt levels, and reduce what you are spending on interest costs. These are just common-sense practices. When you look at how our government is run you find the exact opposite in my view. The national credit card, just like our personal cards, should be used only when needed for emergencies or major long-term programs and only if we can pay it back. What we find today is an ever-growing amount of federal debt the bill for which will eventually come due. The national credit card is steaming hot right now. For the sake of future generations let’s hope we begin to put it down and not use it as much as we have been.


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