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                            Federal Debt & Debt Management
    Federal Debt & Debt Management Jump To:
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                    Issue Summary
    By the end of FY 2023, total federal debt was $33.1 trillion. 79% was debt owed to investors (debt held by the public) and 21% was debt the government owed itself (what Treasury owes to other parts of the government).

Image
              federaldebt**Note: Totals may not add due to rounding.**

To meet government borrowing needs, Treasury borrows money from the public by issuing Treasury securities (e.g., bills, notes, bonds, etc.) to investors on a regular and predictable schedule. Strong investor demand for Treasury securities helps maintain low government borrowing costs. Treasury must continue to promote strong demand for its securities among different types of investors while making debt issuance decisions—such as what type of Treasury security to issue and in what quantity—that navigate financial and economic conditions.

Some of Treasury’s considerations include:

**Uncertain borrowing needs**. Policy changes and economic conditions can quickly affect federal cash flow. For example, the federal response to COVID-19 led to unprecedented spending. Treasury quickly sold securities to raise $3.8 trillion. Meanwhile, Treasury increased its cash-on-hand to over $1 trillion to help deal with the uncertainty around federal pandemic-related spending. Other external events like recessions, military conflicts, and emergencies (e.g., natural disasters such as hurricanes) can also dramatically affect borrowing needs.
	**Uncertainty about future interest rates**. Treasury’s debt management goal is to borrow at the lowest cost over time, while also managing its debt portfolio to mitigate rollover risk (the risk that it may have to refinance its debt at higher interest rates). To do this, Treasury needs to consider the mix of longer-term and shorter-term securities that it offers. Longer-term securities typically have higher interest rates than short-term securities but offer more certainty for budget planning because they do not mature as frequently. On the other hand, short-term securities usually have lower interest rates but must be refinanced more frequently, potentially at higher interest rates.
	**Debt limit uncertainty**. The debt limit is a legal limit on the total amount of federal debt that can be outstanding at one time. Delays in suspending or raising the debt limit create debt and cash management challenges for the Treasury. Delays in raising the debt limit have occurred in 12 of the last 13 fiscal years. As a result, Treasury has often used extraordinary actions, such as suspending investments or temporarily disinvesting securities held in federal employee retirement funds, to remain under the limit. Once it has exhausted all extraordinary actions, Treasury may not issue debt without further action from Congress and the President. If Treasury does not have enough cash on hand to meet its financial commitments, Treasury could be forced to delay payments until sufficient funds become available. Treasury might eventually be forced to default on legal debt obligations, which would have devastating effects on U.S. and global economies. However, there are alternative approaches to the debt limit that would mitigate these risks.
	**Changing financial markets**. Disruptions in the Treasury market could reduce investor demand for Treasury securities and negatively affect Treasury’s ability to borrow money at low cost. For example, the shock of COVID-19 to financial markets led many investors to cash in their Treasury securities at the same time, which caused higher interest rates on some securities and strained market trading. Other market disruptions in recent years have also led to periods of stress. Continued market disruptions pose risks to the liquidity and efficiency of the Treasury market, at a time when debt issuance and debt held by the public continues to grow.Image
              Treasury Building

  Recent Reports
          Financial Audit: Bureau of the Fiscal Service's FY 2023 and FY 2022 Schedules of Federal DebtGAO-24-106340
      
	Published:  Nov 09, 2023


	Publicly Released: Nov 09, 2023
                        Federal Debt Management: Treasury Quickly Financed Historic Government Response to the Pandemic and is assessing Risks to Market FunctioningGAO-21-606
      
	Published:  Aug 17, 2021


	Publicly Released: Aug 17, 2021
                        Federal Debt Management: Treasury Should Strengthen Policies for Market Outreach and Analysis to Maintain Broad-Based Demand for SecuritiesGAO-20-131
      
	Published:  Dec 05, 2019


	Publicly Released: Dec 05, 2019
                        Debt Limit: Market Response to Recent Impasses Underscores Need to Consider Alternative ApproachesGAO-15-476
      
	Published:  Jul 09, 2015


	Publicly Released: Jul 09, 2015
                        Debt Management: Floating Rate Notes Can Help Treasury Meet Borrowing Goals,  but Additional Actions Are Needed to Help Manage RiskGAO-14-535
      
	Published:  Jun 16, 2014


	Publicly Released: Jun 23, 2014
                        Debt Limit: Analysis of 2011-2012 Actions Taken and Effect of Delayed Increase on Borrowing CostsGAO-12-701
      
	Published:  Jul 23, 2012


	Publicly Released: Jul 23, 2012
                        Debt Management: Buybacks Can Enhance Treasury's Capacity to Manage under Changing Market Conditions [Reissued on March 21, 2012]GAO-12-314
      
	Published:  Mar 07, 2012


	Publicly Released: Mar 21, 2012
                        Debt Limit: Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury MarketGAO-11-203
      
	Published:  Feb 22, 2011


	Publicly Released: Feb 22, 2011
                        Debt Management: Treasury Was Able to Fund Economic Stabilization and Recovery Expenditures in a Short Period of Time, but Debt Management Challenges RemainGAO-10-498
      
	Published:  May 18, 2010


	Publicly Released: May 18, 2010
                        Debt Management: Treasury Inflation Protected Securities Should Play a Heightened Role in Addressing Debt Management ChallengesGAO-09-932
      
	Published:  Sep 29, 2009


	Publicly Released: Sep 29, 2009
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  Related Pages
          RelatedAmerica's Fiscal Future
GAO Contacts
    
      Yvonne Jones
      
              Yvonne Jones
            
            Director
      
            jonesy@gao.gov
      
            (202) 512-6806
    James R. McTigue, Jr
      
              James (Jay) R. McTigue, Jr
            
            Director
      
            mctiguej@gao.gov
      
            (202) 512-6806
                                                      MultimediaVideo
    
      GAO: What is the Federal Debt?
      
        
        GAO: What is the Federal Debt?
          Tuesday, November 05, 2013
Podcasts
    
      Debt Limit Alternative Approaches
    Thursday, July 09, 2015
      
            Transcript
Budget 1
          Blog Post
              Trying to Understand the President’s Budget Proposal? Our Budget Glossary Can Help
            Monday, March 28, 2022
      
            Released today, the President’s budget request to Congress spans thousands of pages across multiple...
          Department of the Treasury building in D.C.
          Blog Post
              Federal Debt Has Reached its Ceiling. What Does That Mean?
            Wednesday, September 8, 2021
      
            In the Bipartisan Budget Act of 2019, Congress suspended the federal debt ceiling through July 31...
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