Ivo Welch

Thu, Jun 26, 2025, 3:00 AM5 min read

I’m a finance professor at UCLA, so let’s talk finance. Which numbers are more meaningful to you?

Having $50 to $100 cash in your pocket (rough average for an American) or knowing the total U.S. currency in circulation is $2.4 trillion?

Owing $7,300 on your credit card (average balance of those who don’t pay it off every month) or envisioning the total U.S. credit card debt of $1.2 trillion?

Being $250,000 in debt on your home (average among American consumers with a mortgage) or seeing that the nation’s total residential consumer mortgage debt is $12.8 trillion?

Holding $250,000 in your 401(k) or IRA account (average for baby boomers, now old enough to need it soon) or knowing the total U.S. savings in such accounts is about $27 trillion?

Receiving a monthly Social Security check of $2,000 (the average) or considering the balance of the Social Security trust fund at $2.7 trillion?

I’ve been researching and teaching economics for more than 30 years, and still I can’t wrap my head around trillions of dollars. I’m guessing you can’t, either — and neither can our senators and representatives who determine the federal budget. And yet, our government insists on communicating with us in this unfathomable language.

Worse, even our best media outlets rarely translate the government's incomprehensible abstractions into understandable numbers, giving us sentences like this one from the Wall Street Journal: “President Trump’s tax-and-spending megabill would increase budget deficits by $2.4 trillion over the next decade, compared with doing nothing, according to a Congressional Budget Office estimate released Wednesday.” (By the way, that figure has been revised to $2.8 trillion as of June 18 — as if the human mind could comprehend the difference between those boggling figures.)

And so I want to help people understand both our federal budget deficit and the resulting national debt, as well as our government’s free-spending ways. (Both parties are to blame; no need for politics here.)

The national debt today stands at about $37 trillion. This means that each of our 347 million people is on the hook for about $110,000, or about 2.75 years the median income of $40,000 per year.

Of course, not every U.S. resident earns income or pays income tax. With "only" 154 million taxpayers, this means that the average taxpayer’s piece of the $37-trillion federal debt is about $240,000, or six years of the median income.

Think of this as your share of our federal debt. The government may have borrowed it, but ultimately you are on the hook for it. Feel better now? Probably not. For most people, learning that you owe $240,000 is a lot more concerning than hearing that the national debt is $37 trillion.