Political Discourse Across the Nation | Politically-Oriented Events and Developments in Every State
The U.S. national debt has reached a new milestone, surpassing $37 trillion in January 2023, according to the latest Treasury Department report. This debt growth is a cause for concern for various financial experts, including the Peter G. Peterson Foundation and Maya MacGuineas, president of the Committee for a Responsible Federal Budget.
Rising Borrowing Costs
Interest payments on the national debt are expected to nearly double from about $1 trillion in 2025 to $1.8 trillion by 2035, reflecting higher borrowing costs as debt grows and interest rates fluctuate. This increase in interest payments means more federal revenue will be directed away from other priorities just to service the debt.
Impact on Private Investment
Higher government borrowing can lead to increased interest rates, which raises the cost of borrowing for families and businesses. This situation can "crowd out" private investment because businesses face higher borrowing costs, potentially slowing job creation, wage growth, and overall economic growth.
Federal Budget Priorities
With rising debt and interest costs, federal spending is projected to grow faster than the economy even after some recent spending restraint efforts. For example, federal spending as a share of GDP is forecast to increase from 23.4% in 2024 to 23.8% in 2034 despite recent reforms, meaning fiscal pressure will continue. Mandatory programs like Medicaid will see growth slow but still place increasing demands on the budget. The growing debt restricts the federal government's flexibility to invest in priorities such as infrastructure, education, or emergency responses.
Broader Economic Risks
Sustained large and growing debt levels—already exceeding 119% of GDP—pose risks to economic stability and resilience, and could limit the government's ability to respond to future crises or undertake investments that support long-term economic growth.
The U.S. is currently adding a trillion more to the national debt every 5 months, which is more than twice as fast as the average rate over the last 25 years. This rapid debt accumulation is due in part to more government spending approved after Trump signed Republicans' tax cut and spending legislation earlier this year, as well as the multi-year COVID-19 pandemic starting in 2020.
The result of the Republicans' tax law is estimated to add $4.1 trillion to the national debt over the next decade. Wendy Edelberg, a senior fellow at the Brookings Institution, emphasizes that this continuous borrowing will persist over the course of 2026, 2027, and beyond.
The Joint Economic Committee estimates that at the current average daily rate of growth, another trillion dollar increase to the debt would be reached in approximately 173 days. The federal government borrowed heavily under both President Donald Trump and President Joe Biden during the pandemic.
Government borrowing puts upward pressure on interest rates, according to the Peter G. Peterson Foundation. This, in turn, adds costs for everyone and reduces private sector investment. Within the federal budget, the debt crowds out important priorities and creates a damaging cycle of more borrowing, more interest costs, and even more borrowing.
The Government Accountability Office has outlined potential impacts of rising government debt on Americans, including higher borrowing costs for mortgages and cars, lower wages, and more expensive goods and services.
Experts emphasize the urgent need for policy actions to slow debt growth and improve fiscal sustainability. The Congressional Budget Office and fiscal experts have called for a comprehensive approach that includes both spending cuts and revenue increases. As the national debt continues to rise, addressing this issue becomes increasingly important for the future of the U.S. economy.
- In addition to impacting the federal government, higher interest payments and borrowing costs due to the growing national debt could affect various aspects of everyday life, such as food prices, car-accidents insurance premiums, and mortgage rates.
- Increased government borrowing and debt could lead to stricter immigration policies and legal restrictions, as lawmakers might prioritize debt reduction over other issues, such as immigration reform and general-news coverage.
- Businesses, confronted with a more competitive market due to higher borrowing costs, might invest in policy-and-legislation measures advocating for lower tax rates and less debt growth to ensure a more stable financial landscape and growth.
- The constant need for new revenue sources to finance the national debt might lead to increased enforcement of crime-and-justice laws and regulations to combat illegal activities and recover funds for the government.
- The government's priority to reduce debt could influence the allocation of funds and resources in disaster response efforts, potentially impacting fire departments and emergency services organizations.
- As the national debt grows, both political parties might focus their efforts and campaigns on addressing this issue, making it a key point in debates surrounding politics, war-and-conflicts, and policy discussions.
- The media, recognizing the significance of the national debt, might dedicate more resources to covering the topic, featuring reports on the impact of the issue on the overall economy, individual households, and businesses under the general-news and business sections.
