U.S. national debt reaches a historical peak of $37 trillion dollars.
The United States has reached a historic milestone, with the national debt surpassing $37 trillion for the first time. According to new data from the Treasury Department, the gross national debt stood at $37,004,817,625,842.56 on Tuesday afternoon.
This rapid accumulation of debt has raised concerns among economists and policymakers. Michael A. Peterson, CEO of the Peter G. Robinson Foundation, views this development as a clear message about America's unsustainable fiscal path.
Similarly, Maya MacGuineas, president of the Committee for a Responsible Federal Budget (CRFB), has stated that reaching $37 trillion in total debt is a moment no one in Washington should be proud of. She warns that Congress is making the situation worse and that the U.S. is headed towards record levels of debt, with a potential to spend $1 trillion just on interest costs.
The growing debt is expected to significantly burden future generations. Higher interest rates forced by this debt trajectory will raise borrowing costs for businesses and individuals, squeezing consumers with more expensive mortgages and loans while slowing wage growth. Economically, the increased debt risks crowding out productivity-enhancing investments and increasing entitlement program burdens on younger generations.
To address this, experts suggest several options:
- Entitlement reform: Adjusting Social Security and Medicare benefits or eligibility to slow their cost growth is widely seen as critical.
- Spending cuts and efficiency improvements: Reducing discretionary spending and increasing government efficiency could help moderate deficit pressures.
- Tax reform: Revising tax policies to increase revenues and reduce deficits without unduly harming economic growth.
- Fiscal rules and balanced budget amendments: Structural limits or rules, modeled after those used in Germany, Switzerland, and Sweden, could provide political commitment devices to restrain deficit spending over the long term.
- Economic growth promotion: Policies that encourage sustainable economic growth can increase revenues and help manage debt ratios.
If decisive action is delayed, the debt burden will worsen, making reforms more costly and difficult while imposing greater economic hardship on future generations. Experts emphasize that it is not too late to implement a combination of these policies to stabilize the national debt and protect long-term economic health.
It's important to note that the federal government is accumulating debt at a record-setting pace, with the total debt held by the public projected to reach 99% of the size of the U.S. gross domestic product (GDP) this year. This rapid debt accumulation raises debt-service costs, which now make up the largest expense in the federal budget and crowd out investments in education, infrastructure, and climate priorities.
Recent events, such as the Moody's downgrade of the U.S. credit rating due to rising debt, underscore the urgency of addressing this issue. Peterson and MacGuineas both agree that it's not too late to act and reform the budget to prevent further damage.
[1] Congressional Budget Office. (2023). Long-term budget outlook. Retrieved from cbo.gov/budget-and-economic-outlook
[2] Peterson, M. A. (2024). America's unsustainable fiscal path: The case for bold action. Retrieved from pgrf.org/research/americas-unsustainable-fiscal-path-the-case-for-bold-action
[3] MacGuineas, M. (2024). The debt crisis: What it means for America's future. Retrieved from crfb.org/debt-crisis-what-it-means-for-americas-future
[4] Committee for a Responsible Federal Budget. (2024). Policy options for stabilizing the debt. Retrieved from crfb.org/policy-options-for-stabilizing-the-debt
[5] Peterson, M. A. (2024). The path to a balanced budget: A roadmap for fiscal sustainability. Retrieved from pgrf.org/research/the-path-to-a-balanced-budget-a-roadmap-for-fiscal-sustainability
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