The American national debt is the total amount owed by the federal government, and it has reached record levels exceeding the country's gross domestic product. This debt consists of two main types: public debt held by individuals, companies, and foreign institutions, and internal debt held by federal government agencies such as Social Security funds.

Japan and China are among the largest holders of foreign U.S. debt. The debt arises from the annual budget deficit, which occurs when government expenditures exceed its revenues. The danger of this debt lies in its potential impact on the economy, as it can lead to rising interest rates and a decline in private investment, hindering long-term economic growth. It also diverts a significant portion of government revenues towards servicing the debt instead of spending on vital programs and services for citizens.