What Formula Is Used to Compute Gross Federal Debt?

What Formula Is Used to Compute Gross Federal Debt?

Gross federal debt is calculated by adding debt held by the public and intragovernmental debt. Federal debt increases as a result of government spending and decreases with the receipt of taxes.

Debt held by the public refers to Treasury securities held by shareholders, corporations and individuals who are not a part of federal government. Intragovernmental debt includes Treasury securities held by governmental accounts and federal trust funds, such as the Social Security and Medicare trust funds.

In order to evaluate the federal government's overall financial standing, debt the government has already accrued and the future financial commitments the government has made must be taken into account.