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Public debt is often referred to as the national debt. This is the total amount of money that the federal government owes to investors. When the federal government ends the fiscal year without overspending, the money saved becomes a surplus. However, if the government overspends for the year, the additional spending becomes a deficit. The public debt is a total of all past deficits minus all past surpluses.

When public debt increases, it limits the federal government's ability to respond to economic downturns because the government becomes overextended. The federal government would also struggle to maintain existing public benefit programs like Social Security and Medicare. Currently, the age that an American becomes eligible to draw Social Security benefits increases by two months each year because the federal government is unable to fund growth for the program.

Because interest must be paid on the national debt, increased borrowing leads to higher interest payments. If interest payments on the national debt increase, the responsibility for average Americans would increase as well. Larger portions of the taxes collected would be diverted to cover interest payments and critical infrastructure projects would be neglected. This would result in a decreased standard of living in the United States.

In addition to decreasing the standard of living for Americans, increased debt would also decrease the rating that American corporations have in the global marketplace. Many foreign markets would see that the American government is struggling to make interest payments. As a result, they would begin to evaluate how much each company has invested in treasury bonds. Corporations that have large investments in treasury bonds would have their investment ratings downgraded.