US national debt surpasses $37 trillion for first time
What's the story
The US national debt has crossed the $37 trillion mark for the first time, according to a recent report by the Treasury Department. The figure highlights a rapid increase in America's financial obligations and growing cost pressures on taxpayers. The current level of national debt is significantly higher than pre-pandemic projections made by the Congressional Budget Office (CBO) in January 2020.
Debt factors
COVID-19 pandemic and tax cuts impact on national debt
The COVID-19 pandemic has contributed significantly to the increase in national debt. The federal government borrowed heavily during this period under both then-President Donald Trump and former President Joe Biden to stabilize the economy and support recovery efforts. Further, a tax cut and spending legislation signed by Trump during his current presidency is expected to add $4.1 trillion to the national debt over the next decade, as per CBO estimates.
Debt consequences
Rising debt impacts interest rates, federal budget priorities
Michael Peterson, Chair and CEO of the Peter G. Peterson Foundation, has warned that government borrowing is pushing up interest rates. He said this adds costs for everyone while reducing private sector investment. "Within the federal budget, the debt crowds out important priorities and creates a damaging cycle of more borrowing," Peterson added. Wendy Edelberg from Brookings Institution also noted that Congress plays a major role in setting spending and revenue policy which contributes to this trend.
Debt impact
Government debt affects Americans in various ways
The Government Accountability Office has outlined several ways rising government debt affects Americans. These include higher borrowing costs for mortgages and cars, lower wages due to businesses having less money to invest, and more expensive goods and services. Peterson highlighted the rapid accumulation of trillion-dollar milestones in national debt, noting that the US hit $34 trillion in January 2024, $35 trillion in July 2024, and $36 trillion in November 2024.
Policy response
Urgent action needed to address growing national debt
The Joint Economic Committee has estimated that at the current average daily rate of growth, another trillion dollars would be added to the debt in about 173 days. Maya MacGuineas, president of the Committee for a Responsible Federal Budget, stressed this milestone should prompt policymakers to take immediate action. "We need to do something," she said, emphasizing the urgency of addressing America's growing national debt.