The United States national debt primarily includes “debt held by the public” and “intragovernmental debt,” but it excludes certain financial obligations and debts not directly owed by the federal government, such as state and local government debts, <household debts (mortgages, credit cards), and most importantly, unfunded future obligations for social insurance programs like Social Security and Medicare, though these are often discussed alongside the national debt for fiscal health. Additionally, most debt is subject to the debt limit, though some small, specific categories of debt and certain Federal Financing Bank (FFB) debt are excluded from this statutory constraint. 

Exclusions from National Debt

• State and Local Government Debt: Debts incurred by state and local governments, such as for infrastructure projects, are not part of the national debt. 
• Household Debt: The national debt does not include individual financial burdens like mortgages or credit card debt. 
• Future Social Insurance Obligations: While programs like Social Security and Medicare are legal obligations, the projected future costs and liabilities associated with these programs are not counted in the standard “national debt” figures but rather as liabilities in the government’s comprehensive financial reports. 
• Non-Traded Treasury Securities: Some specific Treasury securities are not considered “marketable” debt and are therefore excluded from the total debt. 
• Unfunded Mandates: The national debt also does not include various unfunded mandates placed on state and local governments. 

What the National Debt Includes

• Debt Held by the Public: This consists of Treasury securities (like bills, notes, and bonds) that are held by individuals, corporations, and foreign entities. 
• Intragovernmental Debt: This is debt owed to other federal government accounts, such as the Social Security trust funds. 

Debt Limit Exclusions

• Most federal debt is subject to the statutory debt limit, but a few categories are not included in the calculation of that limit. 
• Federal Financing Bank (FFB) Debt: Debt issued by the Federal Financing Bank is generally not subject to the debt limit. 
• Certain Discounted Securities: A small amount of Treasury securities sold at a discount to their face value is not subject to the debt limit. 

The United States does not have debt “exclusions by year” in a simple list format, as the national debt is a continuously growing sum of money owed by the government, and what may be considered an “exclusion” refers to how the debt is measured and which parts are counted, such as debt held by the public versus debt held by the Federal Reserve or other government accounts. The debt is divided into “debt held by the public” and “intragovernmental holdings,” which is debt held by government accounts like the Social Security trust funds. There is no fixed list of specific exclusions for each year, but rather the concept of what constitutes the “national debt” changes in how it is measured. 

Key Concepts for Understanding National Debt Data 

• Gross Federal Debt: The total amount the U.S. government has borrowed from all sources.
• Debt Held by the Public: The portion of the debt held by individuals, businesses, and foreign governments.
• Intragovernmental Holdings: Debt held by government accounts, such as the Social Security trust funds. This does not impact the economy directly.

How to Find Data by Year

To find specific debt data for a given year, you can:

• Visit the U.S. Treasury Fiscal Data websitefor “Historical Debt Outstanding” or “Debt to the Penny” to see data over time, including breakdowns by the type of holder, according to the U.S. Treasury. 
• Explore the Congressional Budget Office (CBO) websitefor reports that analyze debt trends, often including discussions of debt held by the public and other components. 

Why There Isn’t a Simple “Exclusion” List by Year

The concept of exclusions relates to the types of debt that are counted. The following shows how the debt is categorized: 

• Debt Held by the Public:This is the primary measure of how much the government has borrowed from the public.
• Debt Not Held by the Public:This category includes Treasury securities held by the Federal Reserve and other government accounts, which are often excluded from discussions of debt that impacts the economy directly.

Instead of looking for a list of yearly “exclusions,” it is more helpful to look at reports by the U.S. Treasury or the Congressional Budget Office (CBO) to understand the components of the national debt and how they are measured. 

The U.S. government includes borrowed funds, specifically the total accumulated borrowing from selling Treasury securities, in the national debt to cover budget deficits where spending exceeds revenue. The Treasury Department tracks all U.S. Treasury securities—bills, notes, and bonds—issued to cover this spending. The national debt is then comprised of debt held by the public (Treasury securities owned by individuals, corporations, and other countries) and intragovernmental debt (funds government programs, such as Social Security, have invested in special Treasury securities). 

How Debt is Incurred

1. Budget Deficits: When the government’s expenditures in a fiscal year surpass its total revenue (from taxes and other income), a budget deficit occurs. 
2. Borrowing through Treasury Securities: To finance these shortfalls, the U.S. Treasury sells Treasury securities. These are essentially loans to the federal government. 
3. Accumulation of Debt: Each dollar borrowed and not yet repaid adds to the national debt. 

Types of Debt Included in the National Debt

The national debt is divided into two main categories:

• Debt Held by the Public:This is the portion of Treasury securities purchased by individuals, corporations, state and local governments, and foreign entities. 
• Intragovernmental Holdings:This includes money that government trust funds, such as the Social Security Trust Fund, have invested in special-issue Treasury securities. These funds are owed by one part of the government to another, but are still considered part of the national debt. 

Fannie Mae and Freddie Mac obligations excluded

Under normal accounting rules, fully owned companies would be consolidated into the books of their owners, but the large size of Fannie Mae and Freddie Mac has made the U.S. government reluctant to incorporate them into its own books. When the two mortgage companies required bailouts, White House Budget Director Jim Nussle, on September 12, 2008, initially indicated their budget plans would not incorporate the government-sponsored enterprise (GSE) debt into the budget because of the temporary nature of the conservator intervention. As the intervention has dragged out, some pundits began to question this accounting treatment, noting that changes in August 2012 “make them even more permanent wards of the state and turn the government’s preferred stock into a permanent, perpetual kind of security”.

The federal government controls the Public Company Accounting Oversight Board, which would normally criticize inconsistent accounting practices, but it does not oversee its own government’s accounting practices or the standards set by the Federal Accounting Standards Advisory Board. The on- or off-balance sheet obligations of those two independent GSEs was just over $5 trillion at the time the conservatorship was put in place, consisting mainly of mortgage payment guarantees and agency bonds. The confusing independent but government-controlled status of the GSEs resulted in investors of the legacy common shares and preferred shares launching various activist campaigns in 2014.

Guaranteed obligations excluded

U.S. federal government guarantees were not included in the public debt total as they were not drawn against. In late 2008, the federal government had guaranteed large amounts of obligations of mutual funds, banks, and corporations under several programs designed to deal with the problems arising from the 2008 financial crisis. The guarantee program lapsed at the end of 2012, when Congress declined to extend the scheme. The funding of direct investments made in response to the crisis, such as those made under the Troubled Asset Relief Program, was included in the debt totals.

Unfunded obligations excluded

The U.S. federal government is obligated under current law to make mandatory payments for programs such as Medicare, Medicaid and Social Security. The Government Accountability Office (GAO) projects that payouts for these programs will significantly exceed tax revenues over the next 75 years. The Medicare Part A (hospital insurance) payouts already exceed program tax revenues, and Social Security payouts exceeded payroll taxes in fiscal year 2010. These deficits require funding from other tax sources or borrowing. The present value of these deficits or unfunded obligations is an estimated $45.8 trillion. This is the amount that would have had to be set aside in 2009 in order to pay for the unfunded obligations, which, under current law, will have to be raised by the government in the future. Approximately $7.7 trillion relates to Social Security, while $38.2 trillion relates to Medicare and Medicaid. In other words, health care programs will require nearly five times more funding than Social Security. Adding this to the national debt and other federal obligations would bring total obligations to nearly $62 trillion. However, these unfunded obligations are not counted in the national debt, as shown in monthly Treasury reports of the national debt.

What is Tracked

The U.S. Treasury Department, through the TreasuryDirect website, tracks and reports the total outstanding debt. They are the official body responsible for managing government borrowing and providing the daily figures for the national debt. 

The federal government’s budget deficits and the mounting public debt to which they give rise are not, in themselves, the greatest problems facing the American people today. Relative to the size of the U.S. economy, the government debt was much greater in the past, during the immediate post-World War II period, than it is now. Yet those years are viewed by many as an economic golden age. Still, to admit that the government’s conduct of its fiscal affairs is not the most pressing problem is not to say that it is no problem at all. It is serious, but we need to keep it in perspective.

The government debt is widely misunderstood, even by some professional economists who ought to know better and whose pronouncements contribute to the confusion. The misunderstandings arise sometimes because people think the public debt is like a private debt, at other times because they think the public debt is not like a private debt. In truth, there are similarities and differences, and one must sort them out to get at the truth.

Similarities exist because a legal debt is a legal debt: all borrowers, whether public or private, must either pay the contracted interest and principal when they come due, or default. Servicing a debt is costly for anybody, but if the borrower opts for the alternative and defaults, some unpleasant consequences will ensue, including a diminished ability to borrow again.

The main difference between public and private debt is that the government has some options not available to private borrowers for effecting what amounts to default. Since the government can inflate the money stock, causing prices to tend to rise and thereby reducing the real value of all assets denominated in units of money, it can effectively default on its promises to repay lenders, to the extent that the lenders did not correctly anticipate the inflation when they made the loans. Notice, however, that the government can always defeat the anticipations of lenders. All it has to do is cause an unexpectedly rapid inflation. Because it has unlimited capacity to increase the money stock, it always holds the power to bring about this kind of surprise.

The government could simply repudiate its obligations outright, as it did in the 1930s when it refused to pay the gold it had promised to purchasers of gold-denominated government bonds, but default by means of inflation is more likely. To some extent the government has been doing this for decades. In the present fiat money regime, it can increase the rate of its default whenever the political and monetary authorities decide to do so.

Early in 1990 the official government debt reached $3 trillion, but—strange to say—the true debt can be viewed as either bigger or smaller.

One can say that the true debt is bigger because the government has entered into extremely large guarantees of private loans and of deposits in banks and other financial institutions, such as the savings and loan industry. In the event that the loans or deposits go bad, the government is committed to making up tile shortfalls. In a proper set of accounts, the present value of the government’s future obligations in the event of such disasters would be added to its other liabilities. The current government accounts make no such addition. Indeed, it would be extremely controversial to decide how much to add. But the fact that some addition needs to be made is beyond dispute.

Internal Debt

On other grounds, the official debt can be viewed as overstated. A large part of it, about 25 percent, is held within the government. That is, the Treasury owes money to other Federal agencies, especially the Social Security Administration. The internal debt is more or less “funny money.” It is also a misleading way to keep the government’s accounts.

There is, for example, no real Social Security Trust Fund—that’s just a scam to reassure a skeptical public. In fact, the Social Security Administration collects Social Security taxes and hands the money over to the Treasury, which spends it. In return, the Social Security Administration receives government bonds, which are simply promises that the Treasury will pay fixed sums of money at specified dates in the future. But because the Treasury itself has no big hoard of funds, when future Social Security benefits come due, they will be payable only if the government collects enough taxes at that time (or borrows once again) to make the payments. The same thing can be said about the other bond holdings within the government. If the government repudiated all its internally held debt, nothing real would be affected, so this part of the debt differs fundamentally from the part held by the public.

Another portion of the debt, about 9 percent, is held by the Federal Reserve System, the nation’s central bank, which is nominally private but actually a creature of the government. Because, by law, the Federal Reserve cannot earn more than a limited amount, much of the interest it receives on its holdings of government bonds is immediately returned to the Treasury, revealing once again that intramural holdings of government debt are essentially different.

Subtracting the roughly one-third of the total debt held either in government accounts or by the Federal Reserve, we arrive at a figure of about $2 trillion for the debt held by others in 1990. The holders include commercial banks, insurance companies, corporations, state and local governments,and individuals, among others. Foreigners hold about $400 billion, that is, about 20 percent of the amount held outside the government and the Federal Reserve.

The amount of the national debt is one of those numbers so huge that the ordinary mind can’t grasp it. One must view it relative to some standard. The most common benchmark is the Gross National Product (GNP), the value of all newly produced goods and services the whole economy turns out in a year. Currently the debt is equal to about 57 percent of the GNP The proportion has been rising for 15 years, and rose especially rapidly during the 1980s. Still, it stands considerably below the ratio that existed in the 1950s. Keeping the relative magnitude of the debt in perspective is a good idea, lest we panic or allow ourselves to be panicked by politicians who seek only to raise taxes.

Historically the government ran persistent deficits only during wars or business slumps. Beginning in the 1960s, however, deficits became chronic. They now occur in good times and bad. Only once since 1960 did the federal government not run a deficit. (Fiscal year 1969 was the single exception.) In the 1980s the size of the deficits shattered all records for peacetime, rising as high as $220 billion in a single year.

Pernicious Deficits

The deficits of the past three decades can be viewed as pernicious for many reasons. Consider just three of the more important ones.

First, the economic case against deficits. When the government borrows money, it diverts private savings to uses that have a smaller component of investment and a larger component of consumption. By bidding up interest rates, government borrowing “crowds out” borrowers who would have made investments in the private economy, while the funds the government borrows are used overwhelmingly for consumption. The result is that the nation’s capital stock, the aggregate of all durable resources that enhance the economy’s productive capacity, grows less rapidly. As a consequence, future standards of living will be lower than they otherwise would have been. Our children and grandchildren will reap smaller harvests because our own generation is feasting on some of the seed corn.

Second, the moral case against deficits. When the service charges on the debt come due in the future, the obligation to make these payments, by suffering some form of taxation, will fall on persons who will have had absolutely no choice about entering into the debt contract and will have received no benefit from it. Unless the government defaults, which would be morally reprehensible and economically harmful in itself, individuals in the future will be stuck with higher taxes, either directly or via inflation, than they otherwise would have had to bear.

The fact that in the future some individuals will receive the interest and principal on bonds they inherited in no way diminishes the force of the argument. The good fortune of the legatees does not cancel the injustice done to others. And justice has to do with individuals, not classes or generations. The soothing apology for the debt, that “we owe it to ourselves,” is a fallacy. The persons who will owe it are not identical to the persons to whom it will be owed.

To gratuitously impose financial obligations on our children and grandchildren for the sake of our own present enjoyment is moral arrogance at best. it bespeaks a contempt for others well captured by the famous remark attributed to Madame de Pompadour, mistress of Louis XV: apres nous le dêluge (after us, the flood), or in today’s terms, the future be damned.

Third—and perhaps worst of all—deficits are deplorable because they are symptomatic of a political system gone corrupt to the core. Notwithstanding all the political rhetoric to the contrary, the government runs chronic deficits because the members of Congress want to run them. They make this choice because they value their re-election more than they value the interests of the general public. Even a cursory examination of the evidence shows unmistakably that the emergence of chronic deficits since 1960 has resulted from Federal spending growth, not from decreased government revenues. . . . .

Politicians are afraid to rein .in the runaway spending so that it will match revenues, because they don’t want to offend those who receive the benefits financed by the government—goodies paid for sooner or later by taxpayers. Much of the government’s spending is channeled to well-organized political .pressure groups whose’ support is viewed as essential by incumbents seeking re-election. Just think of all those PACs whose contribu tions loom so large in Congressional campaigns. Members of Congress are unwilling to take fiscal actions that might jeopardize the electoral support of the special interest groups. The deficits reflect a political system responsive to special interests at the expense of the general interest of the public now, as well as the general interest of future generations.

Notice, however, that the system works nearly to perfection for the politicians. In the elections of 1986 and 1988, when public concern about the deficit ran very high, more than 98 percent of all House incumbents seeking re-election were returned to office. So citizens are saddled not only with large, persistent deficits but with a cynical, self-perpetuating ruling elite.

Unfortunately, given the American political system as presently constituted, individual citizens acting on their own can do virtually nothing to remedy these ills. Because people rarely organize for political action except on behalf of some narrow interest, no one is likely to create an effective political movement in opposition to continuing massive deficits. So far as the government’s fiscal irresponsibility is concerned, the immediate future probably will be no different from the immediate past. The deficit will continue to be like bad weather: everybody will complain about it, but nobody will do anything about it.