As an accounting matter, the national debt is the total amount the federal government owes to holders of its outstanding borrowing. It is a stock of unpaid obligations at a point in time, not the amount the government borrows in a single year or the same thing as its annual budget deficit.
That distinction matters because deficits add to debt when spending exceeds revenue, while other transactions can also affect the total. Understanding what is counted—and who holds the debt—helps make sense of what the national debt figure says, and what it leaves out.
| Measure | Time basis | What it counts |
|---|---|---|
| Total federal debt | Point in time | Public and intragovernmental holdings |
| Debt held by the public | Point in time | Treasury securities held outside federal accounts |
| Annual deficit | Budget period | Spending exceeding revenue |
| Future benefit projections | Future years | Projected Social Security and Medicare obligations |
- 2 Accounting categories in the total: debt held by the public and intragovernmental holdings
- 3 Examples of marketable Treasury securities: bills, notes, and bonds
- 1 Fiscal year is a budget period over which a deficit is measured
What does the national debt count?
The federal debt is the outstanding amount the federal government has borrowed and not yet repaid, measured through its Treasury securities and other borrowing obligations. Its total is divided into two accounting categories: debt held by the public and intragovernmental holdings.
Debt held by the public
Debt held by the public consists of Treasury securities owned outside federal government accounts. Treasury bills, notes and bonds are marketable securities in this category; their owners can include individuals, institutions and foreign holders.
Intragovernmental holdings
Intragovernmental holdings are the other category in the federal debt total: Treasury securities held in federal government accounts. The distinction is about who holds the securities, not whether the debt is part of the total. Public holdings are outside federal accounts, while intragovernmental holdings are within them.
How does Treasury record the total?
The Treasury records federal borrowing by tracking the securities it issues and the amounts of those securities still outstanding. A Treasury bill, note or bond adds a liability when issued; that liability remains in the debt total until the security is repaid.
Two categories, one headline total
Where a Treasury security is held determines which part of the federal debt it enters. Securities held by investors are classified as debt held by the public, while securities held in federal accounts are classified as intragovernmental debt.
The headline debt total combines debt held by the public and intragovernmental debt. It therefore includes Treasury securities held outside the federal government and those held in federal accounts, rather than counting only investor-held securities.
How is the national debt different from the annual deficit?
The annual federal budget deficit is a flow—the amount by which federal spending exceeds revenue during one budget period—while the national debt is a stock: the borrowing still outstanding at a particular point in time. They are related measures, but they describe different things.
For a fiscal year, a deficit means the federal government needs to borrow to cover spending beyond its revenue. That year’s deficit can add to outstanding debt, while repayment can reduce it; the debt total reflects borrowing accumulated over time that has not been repaid.
The federal budget deficit for a fiscal year is therefore not the same accounting measure as the national debt at that year’s end. The deficit covers a period; the debt is measured at a point in time. A year-end debt total incorporates the outstanding balance, not just that year’s shortfall.
Which federal obligations are outside the debt total?
Future Social Security and Medicare benefits are outside the Treasury securities total: they are projected commitments, not money the federal government has already borrowed and left unpaid. The distinction is between an expected benefit payment and a Treasury security issued to finance federal operations that remains outstanding.
Social Security benefits and Medicare benefits therefore do not count as outstanding Treasury securities merely because future payments are projected. A Treasury security is an identifiable federal borrowing instrument; a forecast of future program costs is an estimate of obligations over time. The two describe different things and should not be added together as if they were the same debt.
What the debt total measures
The federal debt tally measures borrowing that is outstanding, not the full cost of every future government promise. Unfunded commitments and estimates of future Social Security and Medicare costs belong in broader fiscal analyses, where they can illuminate long-term pressures without being recast as securities already issued. Keeping that boundary clear makes the debt figure useful: it answers how much federal borrowing remains outstanding, not how much the government may spend on all future benefits.
When can the debt total mislead?
The federal debt total can mislead when it is confused with a different measure: an annual budget shortfall, debt held by the public, or projected future obligations. The annual deficit is the gap between federal spending and revenue over a period; the debt is a cumulative balance built up over time. They are related, but they are not interchangeable.
Debt held by the public is narrower than total federal debt because it excludes amounts the federal government owes to its own accounts. That measure is useful for questions about borrowing from outside the government, but it understates the combined headline total when the subject is all federal debt. The distinction is about what is counted, not whether either measure is valid.
Match the measure to the claim
- Total federal debt: the combined headline measure, including intragovernmental holdings.
- Debt held by the public: federal debt excluding intragovernmental holdings.
- Annual deficit: the budget shortfall over a particular period, not the accumulated debt balance.
- Projected future obligations: estimates of future Social Security and Medicare benefits, which are outside the accounting total for federal debt.
Any comparison should name which of these measures it uses before interpreting a number. Calling total federal debt a complete account of future obligations overstates its scope; treating a deficit as the debt does the opposite kind of damage by mixing a period’s shortfall with a cumulative balance.
Frequently asked questions
Does the national debt include Treasury bonds?
Is the national debt the same as the federal deficit?
Are Social Security and Medicare benefits included in the national debt?
What is the difference between debt held by the public and total federal debt?
Key takeaways
- The national debt is outstanding federal borrowing, not a year's deficit.
- Treasury bills, notes, and bonds count while they remain outstanding.
- Total federal debt combines public holdings and intragovernmental holdings.
- Projected Social Security and Medicare benefits are not included as already-borrowed debt.
