US NATIONAL DEBT HITS A NEW RECORD, SURPASSES $35 TRILLION

Tue 30 July 2024:

The US national debt surpassed $35 trillion for the first time in the nation’s history on Monday as the federal government continues to accumulate debt at a record-setting pace.

New data from the Treasury Department released Monday afternoon showed that the gross national debt hit $35,001,278,179,208.67, Fox News reported.

The milestone comes just months after the US eclipsed the $34 trillion threshold in early January 2024, while the $33 trillion mark was reached in September 2023. By comparison, the national debt hovered around $907 billion just four decades ago.

“This news is incredibly sobering – and incredibly unsurprising for anyone who has been following our fiscal trajectory,” Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget, said in a statement.

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“Just last month the Congressional Budget Office warned Americans that debt held by the public is on its way to a new record share of the economy in three years. The deficit will be nearly $2 trillion this year and nearly $3 trillion in ten years,” MacGuineas added.

“Yet despite all the risks and warning signs, these alarm bells seem to be falling on deaf ears. The bipartisan, deficit-reducing Fiscal Responsibility Act of last year was an excellent start to reducing our deficit; what we need is serious talk about how to build on that first step. Instead we are hearing an awful lot about spending and tax cuts that would make the situation worse, not better,” MacGuineas said.

“We are going to have to get serious about the debt, and soon. Election years cannot be an exception for trying to prevent completely foreseeable dangers – and the debt is one of the major dangers we are facing,” she a dded.

“Enough with the charade of fiscal platitudes followed by deficit-busting records. True fiscal responsibility cannot exist in a vacuum – if we want any hope of putting America back on course toward a sustainable and prosperous future, our leaders need to bridge rhetoric with action,” she said, adding, “Pay for your new spending; pay for your new or extended tax cuts; make deals, shake hands, pass budgets. In a word: govern.”

The US topping $35 trillion in total debt comes as the debt held by the public – a metric favored by economists that excludes debt held in intragovernmental accounts like the Social Security trust funds – is projected to reach 99% of the size of the US gross domestic product this year.

The nonpartisan Congressional Budget Office (CBO) has projected the debt held by the public will reach a record level of more than 106% of GDP in 2027, breaking a nearly 80-year-old record set in 1946 when the US was in the midst of the post-World War II demobilization. From there, the debt-to-GDP ratio is projected to surge in the decades to come.

Federal budget deficits have widened in the last few years amid the rise in interest rates, which increases the net interest costs incurred by servicing the outstanding debt. Mandatory spending programs including Social Security and Medicare have exacerbated that trend, with the safety net programs facing rising costs amid the aging of America’s population.

This year the federal government is projected to run a $1.9 trillion budget deficit, according to the latest estimate by the CBO.

That would be $200 billion larger than last year’s deficit, while the CBO’s latest estimate for the current year is about $408 billion larger than an estimate published in February.

A $1.9 trillion deficit would rank as the third largest in US history, trailing only the $3.1 trillion deficit incurred in fiscal year 2020 and the $2.7 trillion deficit in fiscal year 2021 that occurred during the peak of federal spending on pandemic-era relief programs.

Congress and the winner of this year’s presidential election will face a series of fiscal deadlines next year. The first will arrive on January 1 with the current suspension of the debt limit set to expire, which will force lawmakers to debate another increase or suspension of the debt ceiling and potentially fiscal reforms while the Treasury Department uses “extraordinary measures” to avoid a default for a period of several months.

SOURCE: INDEPENDENT PRESS AND NEWS AGENCIES

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