As an economic crisis persists in the United States, which has seen stupendous hikes in interest rates, the gross national debt is now above a record $31 trillion. This information was published on Monday by the Treasury Department as total public debt hit $31.1 trillion at the close of the day.
The new debt figure is swiftly approaching $31.4 trillion, an artificial cap placed by congress to halt borrowing. Since 2020, outstanding debt in the US has peaked at $8 trillion — $1 trillion topped within the past 8 months alone.
The debt figures soared considerably, especially during the zenith of the COVID-19 pandemic, as the government took on loans relentlessly to combat the rising inflation. The pandemic wreaked significant havoc in the labor market and destabilized the flow of supply chains.
Trump’s administration is reportedly responsible for the incredible surge in debt, even as the Biden administration passed the debt baton. Borrowing costs are higher now as interest rates imposed by the Federal Reserve have taken a very steep turn.
Earlier, President Joe Biden said that his administration is making serious deficit reduction efforts, yet experts fear his policies would increase the debt. In an effort to tame the situation, the Biden administration signed the Inflation Reduction Act.
The Committee for a Responsible Fiscal Budget does not think these efforts are sufficient to assume the situation. According to an estimate made last month by the CRFB, the current administration’s policies could add $4.8 trillion in deficits between 2021 and 2031.
“Excessive borrowing will lead to continued inflationary pressures, drive the national debt to a new record as soon as 2030, and triple federal interest payments over the next decade — or even sooner if interest rates go up faster or more than expected,” the committee wrote.
A Look Into America’s Debt Levels
Borrowing levels has surged in the US in the past 10 years. According to a report from CNN, the pandemic plunged the country into a spending spree. Data from the Treasury Department reveals that President Barack Obama took over when the public debt figure was at $10.6 trillion. When President Donald Trump assumed office on January 20, 2017, the figures were at $19.9 trillion, while President Biden took over the office with $27.8 trillion in debt on January 20, 2021.
At this rate, economists fear an additional boost to the debt milestone would be an extreme problem in the future. Owen Zidar, a Princeton economist, believes that rising interest rates would further aggravate the situation resulting in more costly debts.
Another economist, Alex Pelle of Mizuho Securities, commented that any debt would be a potential issue “five to 10 years down the road.”
“One of the benefits of being the world’s reserve currency is everyone wants to buy your debt for cheap,” he added.