I Asked ChatGPT To Explain the National Debt Like I’m 12 — Here’s What It Said
Written by
Vance Cariaga
Edited by
Jenna Klaverweiden
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America’s national debt recently set a record by surpassing $37 trillion, bringing renewed attention to a topic that regularly makes headlines but isn’t always easily understood.
One reason for the confusion is that the national debt is often mixed up with the national deficit — and they are not the same thing. According to the U.S. Treasury Department, the national deficit occurs when the federal government’s spending is higher than its revenues.
So what is the national debt? GOBankingRates asked ChatGPT to explain it in simple enough terms that a 12-year-old could understand. Here’s what it said.
Also see whether you and your wallet should care about the Big Beautiful Bill’s impact on the national debt.
National Debt Basics
As a way of introducing the subject, ChatGPT compared the United States government to a “huge family with a really big budget.” Most of the family’s money comes from taxes, and it spends that money on everything from schools and roads to hospitals and the military.
The debt part comes in when the government spends more money than it earns.
“When that happens, it needs to borrow money to pay for everything,” ChatGPT noted. “That borrowed money is called the national debt.”
How Does the Government Borrow Money?
When the government goes into debt, it borrows money by selling bonds. Here’s how ChatGPT explained it:
“A bond is like an ‘I owe you’ note. People, banks or even other countries buy these bonds and the government promises to pay them back later with interest (a little extra money as a thank-you). Every time the government borrows more than it pays back, the debt grows. Just like if you keep borrowing money from your parents or friends but don’t pay it back, your IOUs keep piling up.”
From a pure financial standpoint, this constant borrowing doesn’t sound too great. But there is an upside — as long as the debt doesn’t grow too high. For example, it can be used to pay for new and improved highways and fund various programs.
But when the national debt keeps growing higher — as it continues to do in 2025 — it can cause a variety of problems. Here are three cited by ChatGPT:
- The government might have to pay a lot of interest.
- There could be less money for important stuff.
- Other countries might worry about lending to us.
Another problem, related to the third one cited by ChatGPT, is that rising national debt can ding the country’s credit rating. If fact, that has already happened.
The “Big Three” credit ratings agencies — Moody’s, S&P Global and Fitch — have downgraded America’s once-pristine credit rating, Fortune reported. A lower credit rating is one of the main reasons other countries might be leery about lending to the United States.
What Other Sources Say About National Debt
ChatGPT’s simplified explanation of the national debt aligns pretty closely with what other sources have to say. Here’s the Treasury Department explanation:
“The national debt is the amount of money the federal government has borrowed to cover the outstanding balance of expenses incurred over time … To pay for this deficit, the federal government borrows money by selling marketable securities such as Treasury bonds, bills, notes, floating rate notes, and Treasury inflation-protected securities (TIPS).”
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