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U.S. National Debt Hits Record $34 Trillion
January 3, 2024
US National Debt Hits a New Milestone: $34 Trillion
As the calendar flipped to the new year, the United States crossed a daunting financial threshold—the national debt has now ballooned to over $34 trillion. The Treasury Department shed light on this sobering figure amidst heated debates in Congress over federal spending.
The clock is ticking: legislators have until January 19 and February 2 to come to terms on a temporary funding measure or pass the budget, respectively. Without action, the country faces the prospect of its first government shutdown since 2019.
The Soaring Price Tag of Debt Maintenance
The jaw-dropping size of the national debt isn’t the only concern—its servicing costs are soaring too. In an eye-opening analysis called “The Fed And The Debt,” analysts at WWS Swiss Financial Consulting revealed that interest payments on the federal debt have already reached $900 billion this fiscal year and are set to break the $1 trillion mark.
It’s an unsustainable path, they warn. As the Federal Reserve works to keep inflation in check, these mounting deficits add fuel to the fire, intensifying inflationary pressures even as government spending continues unabated, a trend that transcends party lines.
Credit Watchdogs Sound the Alarm
Credit rating agencies have not turned a blind eye to America’s spiraling debt. Moody’s sobering update cast the US fiscal outlook in a negative light, signaling mounting concerns over financial stability. Fitch responded to last summer’s debt ceiling debates with a cut to America’s credit rating, and it’s worth remembering that S&P took the historic step of downgrading the US debt rating back in 2011. Ignoring the fiscal red flags only makes matters worse, hinting that tough choices—like deep spending cuts or tax increases—may be inevitable, rather than more measured strategic corrections.
Finding Fiscal Harmony in a Divided Washington
There’s no magic number for government debt that signals economic doom, and somehow the US has shouldered a heftier fiscal burden than many thought possible without spiraling into crisis. Still, the partisan divide runs deep.
Republicans criticize the hefty federal spending under President Biden’s watch, pointing to the Infrastructure Investment and Jobs Act, the CHIPS and Science Act, and the Inflation Reduction Act. Democrats, on the other hand, spotlight the hefty tax cuts passed by Republicans, which primarily benefited the wealthy and corporations. Charting a course through this economic storm will require tough, bipartisan trade-offs, possibly encompassing tax reforms and a hard look at major government programs like Medicare, Social Security, and defense spending.