During the Subprime Crisis and its aftermath, the US federal debt ratcheted up dramatically. By 2012 it was equal to almost 100 percent of GDP and in the next year it crossed that symbolic level. While the ratio of debt to GDP was climbing before the crisis, the increase in both deficits and debt during the crisis created a political backlash. Conservatives and deficit hawks opposed any further increases in spending and tried to cut both discretionary spending and mandatory entitlements.

Relative to the size of the economy, the largest debt in recent US history was just over 118 percent of GDP in 1946. Most observers probably justified wartime expenditures as warranted given the existential threat of Nazism, but the debt accumulated during the Subprime Crisis did not have a similar rationale, particularly when it was assumed that it was largely due to bailouts of financial institutions, auto companies, and other private enterprises.