What happened
The U.S. gross national debt yesterday hit $40 trillion for the first time, just five months after reaching $39 trillion. The new debt figure is an “ominous milestone for an economy that sits on a shaky fiscal foundation after decades of borrowing to pay for the rising costs of the military, social safety net programs” and President Donald Trump’s tax cuts, The New York Times said. About $1.1 trillion of the more than $2 trillion the U.S. will borrow this year will go toward “soaring interest payments to investors who have purchased America’s debt.”
Who said what
The “federal government’s IOU has now more than doubled in less than a decade,” from $19.95 trillion when Trump was first sworn in, Reuters said. Much of the added debt funded the Covid-19 response. But Trump, who “branded his second presidency as one focused on cost-cutting,” has “largely ignored the dwindling number of fiscal hawks in his Republican Party,” and his “landmark second-term” tax-and-spending bill “will add another $4.7 trillion in debt.”
The bipartisan “inability of lawmakers to confront the debt comes with long-term risks,” the Times said. The “best-case scenario” in an “unsustainable” fiscal trajectory, said Margaret Spellings of the Bipartisan Policy Center. “AI disruption, a recession, global war or any number of other events could quickly push us over the edge from a challenge into a full-blown crisis.”
What next?
The “exploding debt” is “already affecting Americans’ pocketbooks by raising borrowing costs” and squeezing wages, said The Associated Press. The U.S. is expected to hit the current $41.1 trillion statutory debt limit “sometime between late winter and mid-summer,” forcing Congress to “again vote on whether to raise or suspend it.” |
