The US national debt has surpassed $33 trillion for the first time, according to the Treasury Department. Just months after the federal government’s gross debt eclipsed $32 trillion on June 15, 2023. The $33 trillion gross federal debt includes debt held by the public as well as debt held by federal trust funds and other government accounts. In very basic terms, this can be thought of as debt that the government owes to others plus debt that it owes to itself. This is a historic milestone, and it raises important questions about the future of the country’s finances.
The national debt is the total amount of money that the US government owes to its creditors. It has been growing steadily for decades, but it has accelerated in recent years due to a combination of factors, including the COVID-19 pandemic, tax cuts, and increased government spending.
The $33 trillion debt is equivalent to about 120% of the US economy. This means that the government owes more money than the entire economy produces in a year. This is a high debt-to-GDP ratio, and it is raising concerns among economists and policymakers. Crucially, the higher the national debt, the less room the government has to use deficit spending to respond to future recessions, like the one that hit along with COVID-19. A Treasury Department report last week showed that the deficit — the gap between what the United States spends and what it collects through taxes and other revenue — was $1.5 trillion for the first 11 months of the fiscal year, a 61 percent increase from the same period a year ago.
A White House spokesman told CNBC that the debt increase was driven by trillions of dollars in Republican tax cuts “skewed to the wealthy and big corporations” over the past 20 years. The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
“The United States has hit a new milestone that no one will be proud of: our gross national debt just surpassed $33 trillion. Debt held by the public, meanwhile, recently surpassed $26 trillion. We are becoming numb to these huge numbers, but it doesn’t make them any less dangerous.
The Congressional Budget Office confirmed just last week that the underlying deficit is going to roughly double from last fiscal year to this one. Instead of hearing about solutions, we hear promises of which programs our leaders are unwilling to touch and which taxes they are unwilling to raise. That kind of talk is not only pandering, but it’s also downright irresponsible when we have a mess like this on our hands.
The Fiscal Responsibility Act was a step in the right direction, but getting the debt under control will require taking a serious look at health care, Social Security, and the tax code. If policymakers find it too difficult to do this under regular order, then they should put in place a bipartisan fiscal commission to propose solutions.
Policymakers need to be straight with the American public, and they need to come together on a plan to bring our debt under control.”
On Sep 19 we had just crossed the $ 33 trillion mark and as of Oct 7 we were at $ 33.513 trillion. That’s $28.5 billion in new debt per day , and on pace to add another trillion in 1.5 months. This despite the Atlanta Fed forecasting 5% GDP growth and 336K jobs created in Sept. Some might even argue that The strong economy is a facade because exploding debt reveals just how weak it is.
The US government has a number of options for dealing with the national debt. One option is to raise taxes. This would generate more revenue for the government, which could be used to pay down the debt or reduce future borrowing. Another option is to cut spending. This would reduce the amount of money that the government needs to borrow. The government could also try to grow the economy. This would generate more tax revenue and make it easier to service the debt. However, growing the economy is not easy, and it could take many years to see a significant impact on the debt. In an interview with CNBC on Monday, Treasury Secretary Janet L. Yellen said she was comfortable with the nation’s fiscal course because interest costs as a share of the economy remained manageable. However, she suggested that it was important to be mindful of future spending.
The US national debt is a complex issue with no easy solutions. However, it is important to understand the stakes involved in order to make informed decisions about the future of the country.