Explainer
Will the national debt ever be paid off?
Almost certainly not, and that is not the failure it sounds like. The US has been debt-free once in its history, in 1835. The realistic goal is not repayment but stabilising the debt relative to the size of the economy.
5 min read
It has happened once. In January 1835, under Andrew Jackson, the United States paid off its national debt entirely — the only time any major nation has done so. Jackson achieved it by selling federal land and vetoing infrastructure spending, and he considered it his proudest accomplishment.
Within two years the country was in the Panic of 1837, one of the most severe depressions in its history. The causality is disputed and the connection is not simple, but the episode is a useful antidote to the intuition that zero is obviously the right number.
Why the household analogy fails here
A household must retire its debts because its earning life ends. A country has no such horizon. It does not need to repay so much as to keep refinancing — issuing new securities as old ones mature — which it can do indefinitely as long as lenders remain willing.
The debt also is not only a burden. Treasury securities are the collateral the global financial system runs on: the benchmark risk-free asset, the base for pricing every other bond, the instrument money-market funds and foreign central banks park cash in. A world with no US government debt would need to invent a replacement.
The measure that actually matters
The question professionals ask is not "how big is the debt" but "how big is it relative to the economy that services it" — the debt-to-GDP ratio. A debt that grows more slowly than the economy shrinks in every sense that matters, without a single dollar being repaid.
That is what happened after the Second World War. The ratio peaked around 106 percent in 1946 and fell to roughly 23 percent by 1974 — not through repayment, but through sustained growth and inflation outpacing the debt. The nominal debt rose the whole time.
- What would have to change: the primary deficit — spending excluding interest — would need to shrink enough that growth outpaces the debt. That means some combination of higher revenue and slower growth in mandatory programmes.
- What makes it harder now than in 1946: interest costs. When the average rate paid exceeds the economy’s growth rate, the debt compounds faster than the country grows out of it, and the arithmetic stops working in your favour.
- What will not do it: economic growth alone at current deficit levels, or eliminating discretionary spending entirely — which would not close the gap even if every last programme were cut.