US National Debt Soars to Unprecedented $34 Trillion Milestone
US national debt skyrockets to unprecedented $34 trillion, signaling an urgent need for Congress to swiftly negotiate new federal funding plans before looming deadlines
The US federal government's debt has exceeded $34 trillion for the first time, coming just before Congress's deadlines to finalize new federal funding plans. According to the Treasury Department, the "total public debt outstanding" reached $34.001 trillion on December 29. This figure, also referred to as the national debt, encompasses all the borrowing accumulated by the US federal government throughout its history.
Just three months after the US national debt exceeded $33 trillion, the budget deficit, the gap between government spending and tax revenue, expanded. Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a fiscal watchdog, labeled the milestone "a truly disheartening accomplishment."
"Despite the alarming level of debt posing a threat to our economy and national security, America continues to rely on borrowing," she stated on Tuesday.
The national debt has sparked significant conflict between Republicans and Democrats, leading to tense standoffs over the federal budget and occasional government shutdown threats.
Republicans argue that the federal spending programs supported by the Biden administration are excessively costly, while Democrats claim that tax cuts favored by the GOP have reduced revenue. According to White House spokesperson Michael Kikukawa, the increasing total is mainly due to multiple tax breaks benefiting large corporations and the wealthy, resulting in reductions to essential programs like Social Security, Medicare, and Medicaid, negatively impacting ordinary Americans.
Kikukawa announced that President Joe Biden's plan aims to reduce the deficit by $2.5 trillion through measures such as ensuring that the wealthy and big corporations pay their fair share, as well as cutting wasteful spending on special interests, including large pharmaceutical and oil companies.
Regardless of the reasons, the increasing debt and political brinksmanship have negatively impacted America's credit rating. Fitch downgraded its rating on US sovereign debt from AAA to AA+ in August, and in November, Moodys cautioned that it could also revoke the US's perfect AAA rating.
In Washington, lawmakers are under pressure to pass permanent department budgets by January and February following the Senate's approval of a stopgap funding bill in November to prevent a government shutdown. The bill extended funding for military construction, veterans affairs, transportation, housing, and the Energy Department until January 19, while the rest of the government was funded until February 2. Notably, the bill did not include extra aid for Ukraine or Israel.
MacGuineas expressed hope that policymakers will take additional steps to decrease borrowing, such as raising taxes, cutting spending, or establishing a fiscal commission. According to the Treasury, the debt subject to the debt ceiling, which restricts government borrowing and is often a point of political tension, has climbed to $33.89 trillion.
There is a growing concern over the increasing government debt in the United States and other countries, due to the recent rapid rise in interest rates, making it more expensive to manage the debt. The Peter G. Peterson Foundation has reported that the US government is spending $2 billion each day on interest payments for its debt.
The high and increasing debt in America is a concern as it poses a threat to our economic future, according to the foundation's statement on Tuesday. In the next decade, the federal government is projected to allocate more funds towards interest payments than it has historically spent on research and development, infrastructure, and education combined.
Arlette Saenz contributed reporting.
