America’s borrowing binge has pushed the country’s national debt over $31 trillion for the first time ever amid record inflation, rising interest rates and fears of a possible recession.
The United States’ public debt closed at $31.1 trillion on Monday, according to Treasury Department data published Tuesday. The milestone comes as the Federal Reserve continues to hike interest rates to fight the highest inflation in 40 years, and as the government continues to borrow money to fight the pandemic and finance tax cuts.
“So many of the concerns we’ve had about our growing debt path are starting to show themselves as we both grow our debt and grow our rates of interest,” said Michael Peterson, chief executive officer of the Peterson Foundation, which promotes deficit reduction. “Too many people were complacent about our debt path in part because rates were so low.”
The national debt has climbed nearly $8 trillion since the start of the pandemic and has added another trillion in just the last eight months, according to Treasury numbers.
The United States has borrowed more in the last decade than at any other time. When former President Barack Obama took office in 2009, the public debt stood at $10.6 trillion. It was $19.9 trillion when former President Trump took office in 2017 and grew to almost $28 trillion when Biden took office four years later, according to the Treasury Department.
“Excessive borrowing will lead to continued inflationary pressures, drive the national debt to a new record as soon as 2030 and triple federal interest payments over the next decade — or even sooner if interest rates go up faster or by more than expected,” the Committee for a Responsible Federal Budget wrote.
The Biden administration has “enacted policies through legislation and executive actions that will add more than $4.8 trillion to deficits between 2021 and 2031,” according to the CRFB, which singled out the Inflation Reduction Act, the Bipartisan Infrastructure Law, Student Debt Relief, the American Rescue Plan for COVID-19 relief and aid to Ukraine.
“The $4.8 trillion of borrowing approved by the Biden administration is less than the roughly $7.5 trillion President Trump added to the deficit over his term, but much more than the $2.5 trillion President Trump had enacted at this point in his term,” the CRFB said.
The Fed has continued to raise the cost of borrowing, after it dropped rates to near zero during the pandemic. Rates are now closing in on 3.25% and could go higher, adding an additional $1 trillion to what the government spends on interest payments this decade, according to Peterson Foundation estimates.
On Monday, the United Nations demanded the United States, and other rich countries, stop raising interest rates or risk a global recession that would hit developing countries the hardest.
“I don’t know where interest rates are going, but whatever you thought a year ago, you definitely have to revise that,” Harvard economist Jason Furman told The New York Times. “The deficit path is almost certainly too high. We were sort of at the edge of ‘OK’ before. We are past ‘OK’ now.”
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