That is not a good measure of debt. Government debt is only meaningful as a fraction of GDP (large countries have more debt than small ones, e.g.). So in this case you want this graph: http://research.stlouisfed.org/fred2/graph/?g=2TG which is (Gross Federal Debt)/(Gross GDP), and was clearly decreasing.

The distinction between gross and public-held debt is also not very useful. The difference between them is government debt held by parts of the government, which is money that the government owes to itself. Public-held debt was decreasing even more: http://research.stlouisfed.org/fred2/graph/?g=2TI