What exactly is national debt? How does it work?

The United States total public debt, commonly called the national debt, or U.S. government debt, is the amount of money owed by the United States federal government to creditors who hold U.S. debt instruments. Debt held by the public is all federal debt held by states, corporations, individuals, and foreign governments, but does not include intragovernmental debt obligations or debt held for Social Security. Types of securities held by the public include, but are not limited to, Treasury Bills, Notes, Bonds, TIPS, United States Savings Bonds, and State and Local Government Series securities.[1] As of April 2008, the total U.S. federal debt was approximately $9.5 trillion[2], about $31,100 per capita (that is, per U.S. resident). Of this amount, debt held by the public was roughly $5.3 trillion.[3] If, in addition, unfunded Medicaid, Social Security, Medicare, etc. promises are added, this figure rises to a total of $59.1 trillion.[4] In 2007 the public debt was 36.8 percent of GDP ranking 26th in the world.[5] The total debt is currently 66.5% of GNP. It is important to differentiate between public debt and external debt. The former is the amount owed by the government to its creditors, whether they are nationals or foreigners. The latter is the debt of all sectors of the economy (public and private), owed to foreigners. In the U.S., foreign ownership of the public debt is a significant part of the nation's external debt (see also below). The Bureau of the Public Debt, a division of the United States Department of the Treasury, calculates the amount of money owed by the national government on a daily basis. [6][7][8][9] The US budget deficit has been declining for the last three years and the Congressional Budget Office projects a surplus by 2012. However, this estimate is based on current law, which assumes sizable tax reductions will expire in 2010.[10] When the U.S. Government has a surplus, it may pay down its outstanding debt by paying back the principal of the outstanding bonds redeemed for payment while not issuing new bonds. The U.S. Government could also purchase its own outstanding securities on the open market if it was searching for a way to use a surplus to reduce outstanding debt that was not due for redemption in a given year. [11] [12]

the government does not prepare proper accounting statements that compare to those of the business world, or those of a private family. Thus, the "national debt" does not have the same meaning as the debt of a family or a business. *** when a family or a business buys a capital asset [such as a house or office building], it records the value of the property as an asset and reports the amount owed on the mortgage as debt. when government buys a building, or a park, or builds a highway, etc. it records no asset at all and adds the amount paid that was not funded out of current taxes to the national debt. even the state governments do this -- they borrow to build schools, record no asset for the buildings, and report the debt as a liability. rather obviously, this type of one sided accounting badly skews all our thinking about the national debt [as well as our thinking about the "assets" the government owns but has recorded at zero value]. *** the nearest you can come to comparing the national debt to family or business debt is to compare how difficult it is to make the payments. families with payments exceeding about 35% of their pre-tax income are thought so risky that banks won't lend to them any more. for businesses, the similar figure is closer to 50%, but is calculated relative to their pre-tax and interest profit (after all costs of buying product and producing sales). so, what portion of the government's income is obligated to the payments on the debt? and, how much higher can the government's income be made [either by increasing taxes a la Sen. Obama or by increasing growth a la Sen. McCain] without significant harm to the economy [and thus our ability to pay taxes]?? welcome back to politics

National debt means debt of the nation or debt of the government. Since Government is generally representative of people, Government debt of national debt is actually debt of people or tax payers. Hence national debt is also known as public debt. All levels of government, i.e., Central government, federal, government, municipalities or state governments can have national debt. There can be different categories of National debt. It can be debt internal to the country and people lend this money to the government or it can be debt external to the country where the government borrows money from other countries or bodies outside the country. So in either case the government owes money to either internal lenders or external lenders. For raising money internally, government does so by issuing securities which are called bonds of bills. Sometimes Government can borrow directly from commercial banks Bonds can be short, intermediate or long term. Short term is considered generally as one year or less, Medium can be three to eight years, and long term is ten years or more. External loans can be loans that a government takes from the world bank and such international bodies. Loans can also be taken from governments of more affluent countries.

There are two terms which are thrown about rather easily, but don't mean the same thing: "DEFICIT" refers to the ANNUAL shortfall of revenue versus expenses. Currently for the US Gov't it is in the 300-400 Billion dollar range, or roughly $1 Billion per day or roughly $ 42,000,000 per hour (or $12000 - $13000 PER SECOND). That is the rate at which the "DEBT" is increasing. The total debt now approaching 10 Trillion was accumulated to the tune of about 3/4 of it under just 3 Presidents. Two named Bush and one named Reagan. (They are all from the Republican Party, which has the gall to call itself "fiscally responsible".) The Government borrows from individuals, banks, and foreign institutions. The Wikipedia Article on the subject, which some other answerers have just lifted verbatim, gives some details on the amount of the debt held by foreigners. http://en.wikipedia.org/wiki/United_States_public_debt#Amount_of_foreign_ownership_of_U.S._debt The debt is backed by "the full faith and credit" of the United States, which means that is fully obligated to pay it back, even if that means increasing taxes to do so. Up until recent times, the US Government was regarded as THE most trustworthy borrower in the world. How long that continues to be the case, or if it still is, remains to be seen. All in all, it's not a pretty situation. .

its just debt that the govenment has to pay back from its taxes. for example if the goverment gain 21bn of tax they spend around 15bn on education maintenance etc etc that leaves 6bn to pay back the debt however they pay much more....i live in uk and the uk is in debt of billions they have to pay back 20bn in intrest alone they borrow from firms such as banks and large companies...also countries who are relativly rich in terms of budget its all the money they have borrowed over the years and this goes way back....and due to inflation its increased

wow thats a lot of money, im guessing from all the money we are spending on war in iraq, that really messed us up. could you help me with this http://answers.yahoo.com/question/index;_ylt=Aoi9ynCrvpwAHjfhvb5Jlsjsy6IX;_ylv=3?qid=20080617121730AAg9MG1