The number is huge. It’s actually hard to wrap your head around $34 trillion—and counting—blinking on that famous clock in Midtown Manhattan. You’ve probably seen the headlines or heard politicians shouting about it. But when you ask, "Can the national debt ever be paid off?" you're usually asking if we're all going to wake up one day and find the country is broke.
Honestly? It's complicated.
Most people think of the national debt like a credit card or a car loan. If you don't pay it back, the bank takes your house. But a country that prints its own currency doesn't work like a household in Ohio. The US government is the issuer of the dollar, not just a user of it. This changes the math entirely. While "zeroing out the balance" sounds like a responsible thing to do, some economists argue it would actually be a disaster for the global economy.
The $34 Trillion Question: Is Zero Even the Goal?
We’ve only done it once. Just once in the history of the United States has the national debt been completely paid off. That was back in 1835 under Andrew Jackson. He hated the bank, hated debt, and sold off massive amounts of federal land to clear the books.
What happened next? A massive depression. The Panic of 1837 hit, and the country spiraled into a multi-year economic collapse. Why? Because Treasury bonds—which are essentially just pieces of the national debt—act as the world's most trusted "safe asset." If you pay off the debt, those bonds disappear.
Think about that.
Banks, foreign governments, and your own 401(k) rely on Treasuries to keep money safe. Without them, the global financial plumbing starts to leak. When people ask if can the national debt ever be paid off, they often miss the fact that the debt isn't just "money owed." It's also "money saved" by everyone else.
Who do we actually owe?
It’s not just China. In fact, most of the debt is owed to us. Americans.
About 78% of the public debt is held by domestic investors, the Federal Reserve, and various government agencies. When you see your Social Security statement, you're looking at a promise backed by the national debt. The Social Security Trust Fund holds trillions in special-issue Treasuries. If we paid off the debt tomorrow, we’d have to figure out where else to put that money to keep the retirement system afloat.
👉 See also: Why 425 Market Street San Francisco California 94105 Stays Relevant in a Remote World
Foreign entities like Japan and China do hold trillions, but they do it because the US dollar is the global reserve currency. They want our debt because it's the safest place to park their cash.
The Math of Paying It All Back
If we actually decided to get to zero, how would we do it? There are basically three ways. None of them are fun.
First, we could run a massive surplus. This means the government takes in way more in taxes than it spends. To pay off $34 trillion, we’d need to cut spending on everything—military, roads, schools, Medicare—while simultaneously raising taxes to levels we’ve never seen. It would suck the liquidity right out of the private sector. You’d have less money to spend, businesses would have less money to grow, and the economy would likely grind to a halt.
Second, we could try to grow our way out of it. This is the dream. If the GDP grows faster than the debt, the ratio of debt-to-GDP goes down. It makes the debt more manageable. We did this after World War II. We didn't actually pay back the nominal dollars; we just made the economy so much bigger that the debt became a smaller slice of the pie.
The third option is the scary one: Inflation.
If the government prints money to "pay off" the debt, the value of every dollar in your pocket drops. You’re paying back the debt with "cheaper" dollars. It’s a sneaky way of defaulting without actually saying the word. This is what happened in the 1970s, and it’s why your groceries feel so expensive today.
Why the Debt Keeps Growing (and why it might not matter yet)
Politicians love to talk about fiscal responsibility during campaign season. Then they get to D.C. and keep spending. Why? Because the "cost" of the debt is actually the interest payments, not the principal.
As long as interest rates are lower than the rate of economic growth, the debt is technically sustainable. For years, interest rates were near zero. It was basically free money. But now, with the Federal Reserve raising rates to fight inflation, the cost of servicing that $34 trillion is skyrocketing. We are now spending more on interest payments than we do on the entire defense budget.
✨ Don't miss: Is Today a Holiday for the Stock Market? What You Need to Know Before the Opening Bell
That’s a tipping point.
When the interest alone starts to crowd out other spending, that's when the "can the national debt ever be paid off" conversation turns from a theoretical debate into a real-world crisis. We aren't there yet, but we're closer than we were a decade ago.
The Japan Comparison
People have been predicting a US debt collapse for forty years. They point to Japan, which has a debt-to-GDP ratio much higher than ours (over 250%). Japan hasn't collapsed. They’ve struggled with stagnation, sure, but the sky hasn't fallen.
The US has a "superpower" advantage: the dollar. Since most global trade—oil, gold, electronics—is priced in dollars, the world has a constant demand for our currency. This gives us a lot more wiggle room than a country like Greece or Argentina. We can carry a heavier backpack because we have stronger legs. But even the strongest legs have a limit.
The Reality of a "Debt-Free" America
Imagine a world where the US has zero debt. No Treasury bills. No government bonds.
The Federal Reserve would lose its main tool for controlling interest rates. Investors looking for a "risk-free" return would have nowhere to go. This would likely drive money into riskier assets—stocks, crypto, weird real estate deals—creating massive bubbles that eventually pop.
The goal for most serious economists isn't actually to pay the debt off. It's to stabilize it.
We want a "stable" debt-to-GDP ratio. We want the debt to grow slower than the economy. If we can get back to a place where the debt is just a manageable background noise rather than a screaming siren, that’s considered a win. Getting to zero isn't just unlikely; it’s probably not even desirable in a modern capitalist system.
🔗 Read more: Olin Corporation Stock Price: What Most People Get Wrong
The Modern Monetary Theory (MMT) Argument
There is a school of thought called MMT that basically says we shouldn't worry about the debt at all as long as inflation is low. They argue that a government can't "run out of money" if it prints its own.
The only real limit, they say, is resources. If we spend so much that we run out of workers or materials, we get inflation. But the "debt" itself? Just an accounting entry. While this is controversial, it has gained a lot of traction in the last few years because it explains why we've been able to run such high debts without the economy exploding.
What You Should Actually Watch For
Forget the total number. $34 trillion, $40 trillion—at a certain point, it's just Monopoly money.
Instead, look at the Interest-to-Revenue ratio. That’s the real metric. If the government has to spend 20%, 30%, or 40% of all tax revenue just to pay the interest on the debt, that’s when the wheels come off. That's when they have to start making "Sophie's Choice" decisions between paying seniors their Social Security or keeping the lights on at the Pentagon.
We also have to look at "unfunded liabilities." These are the promises we've made for the future—Social Security and Medicare—that aren't technically part of the "debt" yet but will be soon. Some estimates put that number at over $100 trillion.
Actionable Insights for the Debt-Conscious
Since the question of can the national debt ever be paid off seems to have a "probably not" answer, how do you protect yourself? You can't control what Congress does, but you can control your own balance sheet.
- Diversify your currency exposure. If the US decides to inflate its way out of debt, the dollar loses value. Owning assets that aren't purely dollar-denominated—like international stocks, gold, or even certain real estate—can act as a hedge.
- Don't rely solely on government promises. Social Security will likely exist, but the "full retirement age" might keep moving or benefits might be means-tested. Build your own "private" social security through a 401(k) or IRA.
- Watch the 10-Year Treasury yield. This is the "canary in the coal mine." If you see this rate spiking regardless of what the Fed does, it means the market is losing confidence in the US government's ability to manage its debt.
- Focus on productivity. In the long run, the only way a country survives high debt is through innovation. Support policies and companies that actually create things rather than just moving money around.
The national debt is a massive, looming shadow over the US economy. It’s unlikely to ever be "paid off" in the way a person pays off a mortgage. Instead, we’ll likely continue to manage it, roll it over, and hope that our growth stays one step ahead of the interest. It's a high-wire act, and while we haven't fallen yet, the wire is definitely getting thinner.