Final answer:
The National Debt represents the total money owed by a government, with concerns growing when debts exceed a nation's ability to pay. It is often compared to the GDP to gauge financial stability. The U.S. faces long-term challenges due to projected increases in debt, particularly due to social insurance program costs.
Step-by-step explanation:
The term National Debt refers to the total amount of money that a government owes its creditors. It has become a significant concern for many countries around the world. Governments encounter difficulties in paying off their national debt or even just the interest on this debt. When a government's debt exceeds its ability to pay, it may resort to printing more money, a decision that risks hyperinflation and could potentially lead to the collapse of the currency, severely impacting the economy.
A federal budget deficit is an annual measurement of a government's overspending compared to its revenue within a fiscal year, while the national debt accumulates over time as a sum of these deficits and any surpluses. A country's debt is usually measured against its Gross Domestic Product (GDP), with the Debt/GDP Ratio being a key indicator of the country's financial health. In the United States, after periods of paying down the debt post-wartime, the government started accruing substantial debts during peacetime as well, particularly noted from the 1980s onwards. The debt spiked during recessions, most notably in 2008 and 2009.
As of 2019, the U.S. public debt was at approximately 79% of the GDP. While this percentage is less than the country's annual GDP output, the long-term projection is concerning, with predictions of debt swelling to 144% of GDP by 2049, mainly due to the rising costs of social insurance programs, leading to potential public worry over repayment and higher interest rates.