The US National Debt Clock and Its Warning

How the Debt Clock's Warning Affects You

National Debt Clock in 2008, when it was expanded to 14-digits.
••• Photo: Getty Images

The national debt clock tracks the U.S. debt, which was $21.45 trillion as of September 17, 2018. The clock sits at Anita's Way, between One Bryant Park (West 43rd Street) and 151 West 42nd Street on Sixth Avenue in New York City. You don't need to travel to see the debt clock. Visit the U.S. Treasury website, Debt to the Penny, to see the current and archived amount of national debt.

Why the Debt Clock Is Important

The U.S. national debt is the sum of all outstanding debt owed by the federal government. It's an accumulation of each year's budget deficits. Nearly two-thirds is public debt. That's held by individuals, businesses, and foreign governments that bought Treasury bills, notes, and bonds. The government owes the rest to itself, mainly to Social Security and other trust funds.

The debt clock shows how much the U.S. government owes its citizens, other countries, and itself. Most federal revenue comes from individual taxes. The government counts on you to pay the debt back one day. Corporations pass their tax costs through to you by raising prices. In other words, you, your children, and your grandchildren must pay 100 percent of the debt through higher taxes. The higher tax burden that the level of U.S. debt causes dampens expectations. It's a big threat to the quality of life for future generations.

Much of the debt is financed by loans from foreign governments. It gives them a voice in what happens in the United States. When the debt approaches the debt ceiling, politicians must vote to raise that ceiling. Since 2011, when the debt ceiling crisis resulted in the passing of the Budget Control Act of 2011, the debt limit has been suspended four times, twice in 2013, in 2015, and in 2017. The ongoing debt limit issue was discussed when the Bipartisan Budget Act of 2018 went into force in February of that year.

The debt limit was suspended through March 1, 2019, and will be reset to a level according to federal obligations accumulated during that suspension.

Installing the Debt Clock

Real estate investor Seymour Durst created the debt clock in 1989. At that time, the national debt was nearing $2.7 trillion and 50 percent of the gross domestic product. It was initially installed on 42nd Street and Sixth Avenue. Durst is famously quoted as saying, “If it bothers people, then it's working.”

Durst also bought front-page newspaper ads to further express his concern about the growing national debt. He conveyed a prophetic message in his 1991 message: "Federal debt soaring, national economy shrinking, soon the twain shall meet."

The debt clock faithfully recorded the increasing U.S. debt until 2000. That's when the prosperity of the 1990s created enough revenue to reduce the federal budget deficit and debt. It seemed as if the debt clock had accomplished its goal.

Unfortunately, that prosperity didn’t last. The 2001 recession and the 9/11 terrorist attacks meant lower revenues and higher spending. That added more deficits to the debt. The Durst Corporation reactivated the clock in July 2002 when the debt reached $6 trillion. It took 13 years for the debt to double after its initial installation. When the debt exceeded $10 trillion in September 2008, one more digit was added. The $700 billion bailout raised it to $12 trillion in 2010.

If you look at national debt by year, you'll see that the debt has hit a milestone every year since the Great Recession. The only exception was 2015, due to lower spending. Here are some recent examples:

  • August 31, 2012: $16 trillion
  • October 17, 2013: $17 trillion
  • December 15, 2014: $18 trillion
  • January 29, 2016: $19 trillion
  • September 8, 2017: $20 trillion
  • March 15, 2018: $21,000

The Debt Clock Warning

The debt clock's warning is even more critical today. Two factors that allowed the U.S. debt to grow safely are now being withdrawn. First, the Social Security Trust Fund took in more revenue through payroll taxes leveraged on baby boomers than it needed. Ideally, this money should have been invested to be available when the Boomers retire. In reality, the Fund was "loaned" to the government to finance increased deficit spending. This interest-free loan helped keep Treasury Bond interest rates low, allowing more debt financing.

Technically, it's not really a loan, though, since it can only be repaid by increased taxes when the boomers retire, as they are doing now.

Second, many of the foreign holders of U.S. debt are investing more in their own economies. Over time, diminished demand for U.S. Treasuries could increase interest rates, thus slowing the economy. This lessening of demand puts pressure on the dollar. As U.S. dollars and dollar-denominated Treasury securities become less desirable, their value declines. As the dollar declines, foreign holders get paid back in currency that is worth less, which further decreases demand.