The united states owes the largest public debt or federal debt in the world to the tune of about $36 Trillion. In this article we are going to explain how the United States started its debt journey.
The journey started during the revolution war In 1790 through the funding act the united states government picked up debt incured by individual states and due to the revolutionary war Northern states have accumulated a debt of about $25.5 million. And by 1791 the United States government debt has accumulated to $75 million dollars
Of which $40 million domestic, $12 million foreign, and the rest was state debt picked up by the federal government.
They were budget surpluses which reduced the debt but in 1812 due to America war with Britain public debt increased.
After the war there were 18 surplus budgets and in 1835 the united states became debt free. However the government started borrowing again in 1936 although just a little bit But due to the Civil war debt increased to $2.7 billion and World war I caused the debt to climb further to around $25.5 billion.
Although steps where made to reduce public debt which yielded results but after world war II debt climbed to $251 Billion and climbed further to $260 billion in 1950.
After world war II the United States witnessed the economic boom but more money was borrowed to finance the Vietnam war.
President Reagan also increased the federal debt up to 50 percent of GDP in order to win the Cold War.
After that President Bush increased the debt to win a war on terrorism and bail out the banks during the financial crisis to prevent a total crash on financial institutions.
President Obama also increased the debt to finance a plan to restart the economy after the 2008 Global financial crisis.
Then COVID 19 also came and there was need to increase government spending through stimulus packages which as a result lead to more and more debt.