<P> The history of the United States public debt started with federal government debt incurred during the American Revolutionary War by the first U.S treasurer, Michael Hillegas, after its formation in 1789 . The United States has continuously had a fluctuating public debt since then, except for about a year during 1835--1836 . To allow comparisons over the years, public debt is often expressed as a ratio to gross domestic product (GDP). Historically, the United States public debt as a share of GDP has increased during wars and recessions, and subsequently declined . </P> <P> The United States public debt as a percentage of GDP reached its highest level during Harry Truman's first presidential term, during and after World War II . Public debt as a percentage of GDP fell rapidly in the post-World War II period, and reached a low in 1973 under President Richard Nixon . Debt as a share of GDP has consistently increased since then, except during the terms of presidents Jimmy Carter and Bill Clinton . Public debt rose during the 1980s, as President Reagan cut tax rates and increased military spending . It fell during the 1990s, due to decreased military spending, increased taxes and the 1990s boom . Public debt rose sharply in the wake of the 2007--08 financial crisis and the resulting significant tax revenue declines and spending increases . </P> <P> Except for about a year during 1835--1836, the United States has continuously had a fluctuating public debt since its Constitution went into effect on March 4, 1789 . During the American Revolution, the Continental Congress, under the Articles of Confederation, amassed huge war debts, but lacked the power to repay these obligations through taxation or duties on imports . </P> <P> On the founding of the United States, the financial affairs of the new federation were in disarray, exacerbated by an economic crisis in urban commercial centers . In 1790, Secretary of the Treasury Alexander Hamilton pushed for Congress to pass a financial plan, called the First Report on the Public Credit, a controversial part of which involved the federal government assuming state debts incurred during the Revolutionary War . Northern states had accumulated a huge amount of debt during the war, amounting to $21.5 million, and wanted the federal government to assume their burden . The Southern states, which had lower or no debts, whose citizens would effectively pay a portion of this debt if the federal government assumed it, were disinclined to accept the proposal . Some states, including Virginia, had already paid off almost half of their debts, and felt that their taxpayers should not be assessed again to bail out the less provident, and further argued that the plan was beyond the constitutional power of the new government . James Madison, then a representative from Virginia, led a group of legislators from the South in blocking the provision and prevent the plan from gaining approval . Jefferson supported Madison The plan was finally adopted as part of the Compromise of 1790, as the Funding Act of 1790 . The compromise meant that the state debts were all picked up by the federal Treasury, and the permanent national capital would be located in the South, along the Virginia - Maryland border in what became the District of Colombia . </P>

When was the last time the usa had no debt