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US National Debt Hits $40 Trillion 08/20 06:39
The national debt surpassed a record $40 trillion on Wednesday, a staggering
milestone as defense costs, social programs like Social Security and Medicare
and interest on the burgeoning deficit make up an enormous share of federal
spending.
WASHINGTON (AP) -- The national debt surpassed a record $40 trillion on
Wednesday, a staggering milestone as defense costs, social programs like Social
Security and Medicare and interest on the burgeoning deficit make up an
enormous share of federal spending.
The milestone figure was recorded just five months after the U.S. hit a
record $39 trillion debt in March. It reached $38 trillion five months before
that, in October.
The unprecedented $40 trillion figure highlights competing administration
priorities, from boosting defense spending that the U.S. relies on to carry out
President Donald Trump's almost-6-month-old war in Iran to lowering the cost of
gas and groceries.
Kush Desai, a White House spokesman, said the Trump administration "has been
focused on slashing waste, fraud, and abuse in federal spending while
accelerating economic growth to get America's debt-to-GDP ratio trending in the
right direction."
However, experts say the exploding debt and the latest record milestone are
already affecting Americans' pocketbooks by raising borrowing costs for things
like mortgages and cars, lowering wages from businesses that have less money
available to invest, and creating more expensive goods and services.
"If we want to improve our living standards, today and for the next
generation, now is the time for lawmakers to put our nation on a more
affordable and sustainable path," says Michael A. Peterson, CEO of the Peter G.
Peterson Foundation, a think tank focused on U.S. fiscal challenges.
The debt has exploded over several presidential administrations, as the
nation's leaders spend more money than it collects in taxes. In recent memory,
the multi-year COVID-19 pandemic shut down much of the U.S. economy, where the
federal government borrowed heavily during President Trump's first term and
under former President Joe Biden to stabilize the economy and support a
recovery.
More government spending was approved after Trump signed Republicans' tax
cut and spending legislation into law last year.
Advocates for a balanced budget also warn that the long-term trend of
borrowing more and paying more in interest will force Americans to face tougher
fiscal tradeoffs ahead.
"The federal debt is already raising the cost of living and choking out
other spending and investment, threatening our economy and Americans' long-term
prosperity," said Margaret Spellings, president and CEO of the Bipartisan
Policy Center.
"Our current fiscal trajectory is plainly unsustainable, and that's the
best-case scenario. AI disruption, a recession, global war, or any number of
other events could quickly push us over the edge from a challenge into a
full-blown crisis," Spellings said in a statement.
The U.S. is subject to a statutory debt limit, or a limit to federal
borrowing, which Congress has the authority to set, adjust or abolish. The
Bipartisan Policy Center estimates that the U.S. will most likely reach the
$41.1 trillion debt limit sometime between late winter and mid-summer of 2027,
requiring Congress to again vote on whether to raise or suspend it.
The U.S.' fiscal position stands as the worst among other developed
countries, according to recent data analysis from the Organization for Economic
Co-operation and Development.
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