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For the first time, the national debt of the United States has surpassed the $31 trillion mark, reaching this milestone at a period of record high inflation, rising interest rates, and escalating economic instability.
According to Treasury Department numbers released Tuesday, the nation’s total public debt as of Monday was $31.1 trillion.
When the Covid-19 pandemic hit, the US government went on a borrowing binge to support the country’s economy as the fatal virus upended lives, labor markets, and supply networks. Since the start of 2020, the total amount of outstanding debt has increased by around $8 trillion. And in just eight months, it increased by $1 trillion.
The borrowing took place during the Trump and early Biden administrations, when interest rates were at an all-time low. Borrowing costs are much higher right now due to historically high inflation and a string of sharp interest rate increases by the Federal Reserve in an effort to rein in rising prices.
President Joe Biden’s ideas, according to an assessment made by the Committee for a Responsible Fiscal Budget last month, may increase deficits by $4.8 trillion between 2021 and 2031.
The national debt might reach a new record as early as 2030 due to excessive borrowing, and government interest payments could triple over the following ten years, or even sooner if interest rates rise more quickly than anticipated.
Over the last ten years, America’s borrowing has increased dramatically. According to Treasury Department data, the total amount of outstanding public debt increased from $10.6 trillion when former President Barack Obama took office on January 20, 2009, to $19.9 trillion when former President Donald Trump assumed office on January 20, 2017, to $27.8 trillion when Biden assumed office on January 20, 2021.
Although surpassing another debt milestone would portend a “very substantial problem” down the road, high inflation rates are currently the biggest cause for concern, according to Alex Pelle, US economist with Mizuho Securities.
“Any form of debt issue is really a prospective issue, not even a sure issue, but a possible one for five to ten years down the road,” he declared. Being the reserve currency of the world has many advantages, including the desire of everyone to purchase your debt at a discount.
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