The U.S. national debt made headlines in August, when it surpassed $40 trillion dollars. According to the U.S. Congress Joint Economic Committee, the debt increases by $7.35 billion per day. These numbers are almost too large to comprehend. Today, debates over federal spending, taxation, borrowing, and the debt ceiling regularly make national news. But the United States has been borrowing money almost from the moment it came into existence.
The history of the national debt is therefore also a history of the United States itself. Wars, economic crises, tax policy, social programs, and changing ideas about the role of the federal government have all influenced the nation's borrowing. The legal framework governing that borrowing has changed as well.
For students and researchers interested in constitutional law, legislation, economics, or American history, the national debt provides an especially interesting example of how law and public policy intersect. This article will provide a brief history and some UW Law Library resources for further research.
What Is the National Debt?
Before looking at its history, it is useful to distinguish several related concepts.
The federal budget deficit is the amount by which federal spending exceeds federal revenues in a particular year. When the federal government runs a deficit, it generally borrows to make up the difference. Each year's deficit can therefore add to the accumulated national debt.
The national debt is the total amount the federal government owes. It includes debt held by members of the public—including individuals, financial institutions, investors, state and local governments, the Federal Reserve, and foreign investors—as well as intragovernmental debt, which represents federal government accounts holding federal securities.
When researching the national debt, government resources can be an excellent starting place and provide indispensable data and primary law.
One such resource is the Congressional Research Service (CRS). CRS provides comprehensive, reliable and nonpartisan legislative research and analysis in reports that are timely, objective, and authoritative. They can be found in multiple UW Law Databases, such as ProQuest Congressional or HeinOnline. ProQuest Congressional has an entire collection of government documents in their Debt Limit topic timeline. HeinOnline has thousands of CRS reports in their collection, with over one hundred on the topic of national debt.
The Revolutionary War and the Birth of Federal Debt
The origins of the national debt predate the Constitution. During the American Revolution, the Continental Congress borrowed extensively to finance the war, leaving the new nation with substantial financial obligations.
The History of the Debt, available on the U.S. Treasury's website, traces federal borrowing from the Revolutionary period to the present. This resource provides brief summaries structured in timeline format. It walks researchers from Alexander Hamilton’s 1790 First Report on the Public Credit to Andrew Jackson’s presidency (the only time the national debt reached zero) and concludes with the present day.
War and the Expansion of Federal Borrowing
Major wars have repeatedly produced major increases in federal debt.
The War of 1812 was financed substantially through borrowing. The Civil War produced an even more dramatic transformation. Federal public debt increased from approximately $65 million in 1860 to roughly $2.2 billion by the end of the Civil War.
The government developed new methods of financing the war on an unprecedented scale. Congress authorized the issuance of United States notes and permitted the sale of bonds. The National Bank Act of 1863 established a framework for federally chartered national banks. A detailed legislative history of the National Bank Act of 1863 is available in ProQuest Legislative Insight . The Office of the Comptroller of the Currency has a narrative timeline for those wanting to research more about the founding of the banking system.
The Civil War demonstrates how borrowing can produce broader changes in federal law and financial institutions. Debt was not simply a way to pay the government's bills; it helped transform the nation's financial infrastructure.
World War I and the Modern Debt Ceiling
The modern debt ceiling has its roots in World War I. Before the twentieth century, Congress generally approved federal borrowing individually. As borrowing increased, Congress shifted toward setting an overall debt limit. During World War I, Congress authorized substantial borrowing, including through Liberty Bonds and short-term certificates. More information on Liberty Bonds can be found at Federal Reserve History, a website maintained by the Federal Reserve Bank of St. Louis's Economic Research division.
The CRS report The Debt Limit explains the statutory debt limit as codified at 31 U.S.C. § 3101.
Perhaps the most interesting aspect of the modern national debt debate is the debt ceiling.
The debt ceiling creates an unusual situation because Congress may enact legislation requiring the federal government to spend money without simultaneously providing enough borrowing authority to cover those obligations.
When the government approaches the statutory debt limit, Congress may:
- increase the debt limit;
- suspend the debt limit temporarily; or
- leave the limit unchanged, requiring Treasury to use available statutory mechanisms, often called "extraordinary measures," to postpone the date on which the limit becomes binding.
For specific numbers on the debt limit, the U.S. Treasury maintains historical debt data dating back to 1789. As well as a collection of documents related to increasing the debt limit beginning in 2011.
How Much Debt Is "Too Much"?
Economists and policymakers commonly examine the national debt relative to the size of the economy through the debt-to-GDP ratio. The CRS has emphasized that the economic significance of debt depends on factors including the size of the economy, interest rates, economic growth, and the government's long-term budget outlook in its reports. Its historical overview, The Federal Government Debt: Its Size and Economic Significance, provides additional background.
The relationship between debt and economic growth is therefore more complicated than a simple "more debt is bad" proposition. Borrowing can help finance emergency responses and other public priorities. At the same time, persistent deficits can increase interest costs and create longer-term fiscal challenges.
The U.S. Government Accountability Office (GAO) published a report in March 2026 examining the effects of congressional impasses and increases to the debt limit. This government document provides an excellent jumping off point for those wanting to know more about the cost of government borrowing.
The history of the national debt does not provide a simple argument for or against government borrowing. Instead, it demonstrates that federal debt has served different purposes at different moments in American history.
The Revolutionary War created the first national debt. Alexander Hamilton used federal borrowing to establish the credit of the new government. Andrew Jackson temporarily eliminated the debt altogether. The Civil War transformed federal finance and banking. World War I helped produce the modern debt ceiling. The Great Depression changed thinking about deficits and economic policy. World War II produced an unprecedented increase in borrowing, followed by decades of declining debt relative to GDP. Recessions, wars, tax policy, social programs, and the COVID-19 pandemic have continued to shape the government's fiscal position.
The national debt is ultimately a product of law and policy.
Congress determines taxes and spending through legislation. Congress also establishes the legal framework within which the Treasury borrows. Courts and legal scholars have debated the constitutional limits of federal fiscal authority. Executive agencies administer the resulting financial system. And the economic consequences of those decisions unfold over decades.
The national debt, in other words, is not merely a number on a screen. It is a historical record of national choices.
Submitted by Liz Manriquez, Head of Reference & Scholarly Support on October 9, 2026
This article appears in the categories: Law Library
