According to the Treasury Department’s daily balance sheet update on Monday, the nation’s debt has reached a record high of $33 trillion, marking a significant fiscal milestone. The real-time US debt clock website registers the actual debt level slightly higher at $33.04 trillion, with a debt-to-GDP ratio of 122.4%.
Treasury Secretary Janet Yellen responded to this record-breaking figure by emphasising that the interest costs associated with the current debt are manageable. Nevertheless, she urged policymakers to take swift action, stating, The president [Joe Biden] has proposed a series of measures that would reduce our deficits over time while investing in the economy, and this is something we need to do going forward.” However, she did not provide specific details regarding these measures.
The surge in US debt began after President Biden approved a bill in early June that suspended the $31.4 trillion debt ceiling for a two-year period. This suspension effectively allowed the government to continue borrowing without limitations until 2024. Prior to this move, the Treasury had issued multiple warnings that failing to suspend the ceiling could lead to a default on the nation’s financial obligations.
Consequently, the national debt quickly escalated to $32 trillion within just two weeks of the bill’s approval, and it has continued to grow since then. To put this in perspective, around four decades ago, the national debt stood at approximately $907 billion. Projections from the Congressional Budget Office indicate that, at its current rate, the US national debt could nearly double in size within the next three decades.
Maya MacGuineas, the president of the Committee for a Responsible Federal Budget (CRFB), expressed concern about this latest milestone, stating, “The United States has hit a new milestone that no one will be proud of: our gross national debt just surpassed $33 trillion.
Meanwhile, the amount of public debt has recently surpassed $26 trillion. We are becoming numb to these huge numbers, but it doesn’t make them any less dangerous.”
Sean Snaith, an economist at the University of Central Florida, echoed these concerns, emphasising that the record debt level serves as “a warning shot across the US government’s bow that it needs to right its fiscal ship.” He cautioned against continued deficit spending, stating, “You can’t just spend trillions of dollars more than you have in revenue every year and expect no ill consequences.”
