United States National Debt:

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US Debt Clock - sources and methods

The U.S. Department of the Treasury, Bureau of the Public Debt on its TreasuryDirect website, Debt to the Penny section, publishes - every business day by 3 PM - the Public Debt amount that was outstanding at the end of the previous business day. The system relies on reporting entities (for example, Federal Reserve Banks) that report a variety of Treasury security information at the end of each business day.

Worldometers has developed an algorithm which calculates the current estimated rate of change of the amount of debt outstanding in between the daily US Treasury updates. The formula components are recalculated daily as the latest official US National Debt data is published, so that the algorithm continuously adjusts itself accordingly. The magnitude and even direction of the daily changes can be erratic and unpredictable. For example, even though on a yearly or monthly basis the US debt might be overall increasing (as it is the case now), there are days when the US debt will decrease with respect to the previous day, only because on that particular day there happened to be more redemptions of Treasury securities than there were issues. During these limited time intervals, unless the change in direction and magnitude is in any way representative of a trend, the US debt clock will not show a decreasing debt, as it clearly would not provide an accurate representation of the current trend, but it will instead show the debt increasing at the current average rate, and eventually re-adjusting suddenly to a lower level.

U.S. National Debt - what is it?

Simplifying, every year the United States Government collects revenue from taxes and spends it on its public programs and agencies. If in any given year it spends more than it earns, its yearly budget will result in a deficit. To cover the deficit, the U.S. Treasury will have to borrow money (by selling securities like Treasury bills, notes, bonds and savings bonds to the public), just like an individual who spends more than what he earns will have to borrow the missing amount from a credit card. The accumulated deficits year after year form the outstanding US national debt.


What is the U.S. Debt Ceiling?

The debt ceiling is the maximum amount that can be borrowed by the United States Federal Government. This limit is set by the U.S. Congress. The current U.S. debt ceiling is $14.294 trillion, as signed into law on February 12, 2010 (an increase of $1.9 trillions from the previous limit of $12.394 trillion). On August 1, 2011, one day prior to the threatened default, the House of Representatives approved a raise of the U.S. debt limit by at least $2.1 trillion and a cut in federal spending by at least $2.4 trillion.

When will the debt limit be reached?

It has already been reached on May 16, 2011, at which time the Treasury declared a "debt issuance suspension period" which allows it to utilize extraordinary methods other than issuing new debt to acquire funds to meet federal obligations.

However, according to the U.S. Treasury, the alternative funding sources would have been exhausted on August 2, 2011, if one day prior to this deadline the U.S. Congress had not approved a raise in the debt ceiling. Without the approved increase, eventually the U.S. Government would have not been able to pay for all of the federal governments obligations and to further borrow money.

Similar debt crisis emergencies as the one culminating with the August 1, 2011 legislation, were anticipated for the 2012 and 2013 budget.

References and useful links

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