Economics 101 & Public Square

How Should Christians Think About the National Debt?

LinkedIn Email Print

In January 2023, the United States reached its national debt limit of $31.4 trillion. Set by law, the debt limit is the maximum debt that the Department of Treasury can issue to the public or other federal agencies. To give Congress time to react, the Treasury announced it would take “extraordinary measures” to continue borrowing funds without breaching the limit. But if the ceiling is not increased before those measures end (likely between July and September), the government will either need to delay funding for certain programs or default on its debt obligations—or both. 

The federal debt is the cumulative amount of annual budget deficits, when expenditures for government programs (including interest on the debt) outpace tax receipts. To stem the shortfall, the Treasury issues securities backed by the full faith and credit of the U.S. government. As a share of the economy, outstanding U.S. debt has grown steadily over the past few decades, reaching 115% of GDP. Only two other countries in the worldJapan and Italyhave higher debt-to-GDP ratios.  

The January announcement set off a heated debate about whether the government should simply raise the limit to ensure against catastrophic default or whether increasing the debt ceiling should be accompanied by spending cuts. During his State of the Union Address in February, President Biden took one of the biggest budget items off the table: Social Security. 

Americans have become somewhat jaded about budget showdowns and believe there is some “crying wolf” when it comes to the direness of the situation. Is this one of those times? Christians can draw on three biblical insights when thinking about our country’s indebtedness. 


Anyone who has used credit cards knows that things can get out of hand pretty fast without careful attention to expenses and interest on unpaid amounts. While running a balanced budget at home is one thing, there are valid reasons for governments to borrow funds and pay them back over time; in fact, our country has borrowed money since the Revolutionary War. Long-term bonds are issued to fund capital improvements, such as highways and bridges, on the understanding that the future beneficiaries of these investments should help pay for them. Funding for wartime needs, or the pandemic, also are valid reasons to issue large quantities of debt. 

However, government borrowing to fund regular operations can become dangerously habit-forming. When interest rates were low or even negative, interest on the debt was not such a concern, but that is fast changing. By 2033, interest will account for 14% of the budgetgreater than spending on defense or Medicaid. The growth in debt servicing expenses may eventually crimp our country’s ability to respond to emerging needs. 

In 2011, when the U.S. also faced a budget brink, the credit agency Standard & Poor’s downgraded the quality of U.S. debt from its long-standing AAA rating. There is concern now that the other two agencies, Moody’s and Fitch, might follow suit. A downgrade not only increases borrowing costs, but it signals further deterioration in the U.S. balance sheet. The United States dollar has long enjoyed the status as global reserve currency, which gives our country considerable financial power. When things are rocky in other parts of the world, there is a “flight to quality” in U.S. dollar-denominated debt. Lest we want to be like Esau, who threw away his “birthright for a single meal” (Heb. 12:16), we should not take that enviable status for granted. Life in America would be very different without the ability to borrow however much money we need at the cheapest price.


Imagine trying to run your household affairs with control over only one-third of the spending decisions. Sadly that is the present state of the budget process on Capitol Hill. Spending for so-called discretionary programs, which account for one-third of government spending, requires the approval of congressional appropriators. However, the remaining two-thirds of spending is largely on automatic pilot. This is because spending for entitlement programs, such as Social Security and Medicare, is permanently authorized; annual spending amounts are determined by eligibility rules, program benefits, and other factors. 

Growth in entitlement spending is responsible for the meteoric rise in the debt-to-GDP ratio. Because these programs are so popular, and the benefits geographically diffused through the country, politicians are loath to touch them. But it is a political canard to call for balancing the budget by cutting discretionary programs, including defense, or by going after “waste, fraud, and abuse.” While the government can always improve the efficiency of its operations, there simply is not enough to cut in these programs to make a sizable dent in annual deficits. Entitlements need to be brought under budget discipline along with other spending; it is simply unwise to leave so much of the budget to its own devices. Will it require sacrifice? Yes. But “a man without self-control is like a city broken into and left without walls” (Prov. 25:28).


To be a debtor nation is to place oneself at some level of risk. Why? Because no matter how large and seemingly vibrant the economy, a debtor nation remains “the slave of the lender” (Prov. 22:7). According to the Office of Management and Budget, foreign investors and nations held approximately 30% of U.S. public debt in 2022. Of that amount, Japan and China held 15% and 12%, respectively. While the percentage of foreign holdings is down from earlier years, it represents a significant stake in the U.S. economy. Should the U.S. default on its obligations, or come close to it, these and other nations gain leverage. Ancient Israel was permitted to lend to other nations, but not to borrow from them, that “they shall not rule over you” (Deut. 15:6). Likewise, the U.S. would be wise to limit its financial exposure as much as possible.

Is this just another budget showdown? Even if legislators can avoid rattling world markets come July, why get so close to the cliff? Stewardship, self-control, and safety are important checks on the rampant growth in federal debt. 

Did you find this article helpful? Subscribe for more resources from IFWE!

Further readings on Economics 101 & Public Square

  • Economics 101
  • Public Square

All-consuming. Raucous. Rage-filled. Divisive. Whatever words you choose to describe an election year in the United States, virtually everyone recognizes…

  • Economics 101
  • Public Square
How To Think About Student Loan Forgiveness

By: Susan Wharton Gates

9 minute read

On February 28, the Supreme Court of the United States heard oral arguments for two cases challenging the Biden Administration’s…

Did you find this article helpful? Subscribe for more resources from IFWE!