America’s national debt is a monster that keeps growing. At $36 trillion, it’s the highest in history, with no signs of slowing down.
In 16 years, the debt-to-GDP ratio has doubled, now sitting at 121%. Compare that to World War II, when it maxed out at 119%. Back then, the country was fighting global tyranny. Now? The debt is ballooning because of poor fiscal planning and relentless spending.
Since 2008, the federal debt has skyrocketed by $26.6 trillion, nearly tripling, while the economy only grew by $14.6 trillion. That’s a $12 trillion shortfall. Economists predict even worse to come.
The Congressional Budget Office (CBO) says the debt-to-GDP ratio could hit 131% by 2034, assuming the economy avoids a recession.
Debt is eating America’s budget alive
Debt servicing is bleeding America dry. Every single day, the government spends over $1 billion just on interest payments. This year, the cost is expected to top $1 trillion, more than what the nation spends on defense.
Think about that. America is putting more money into its debt interest than into securing its borders or upgrading its military. The situation’s even worse thanks to high interest rates.
Since the pandemic, the Federal Reserve has increased rates, making borrowing more expensive. This is pushing up costs everywhere, from mortgages to groceries.
Right now, the debt-to-GDP ratio is at 125%. Experts think it could hit 200% in a few years. That would mean the debt is twice the size of the entire economy. When that happens, the government will spend more on interest payments than on things people actually need, like infrastructure and education.
On average, every American owes $108,000. That’s money being sucked away from investments that could build a better future. Instead of funding new roads, schools, or tech, the cash is going to creditors.
Trump’s second term faces a storm
President Donald Trump is walking into his second term with an economic time bomb. His administration is scrambling to control spending. Enter the Department of Government Efficiency, a new initiative led by Elon Musk and Vivek Ramaswamy.
Elon says they can slash billions from the budget. Proposed cuts include slashing public broadcasting and pulling funding from advocacy groups tied to abortion rights.
But here’s the issue: Trump still wants more tax cuts. His new plan includes slashing corporate taxes to 15%. Critics are already sharpening their knives. They say it’ll blow up the deficit even more.
Jessica Fulton from the Joint Center for Political and Economic Studies says these cuts would favor the wealthy and leave the country in a deeper financial hole. Even some Republican lawmakers are uneasy, calling the plan reckless when the deficit has already tripled.
High interest rates are also creating roadblocks. The yield on 10-year Treasury notes, a key benchmark for borrowing, has jumped from 0.6% in 2020 to 4.4% recently. This means the government’s borrowing costs are through the roof. The same applies to everyday Americans.
The administration isn’t out of ideas, though. One controversial plan involves refusing to spend money already approved by Congress. Another proposal targets funding cuts for energy and environmental projects tied to the Inflation Reduction Act. Both ideas could face legal challenges, but desperate times do call for desperate measures.
The debt spiral threatens long-term growth
The pandemic made everything worse. America’s debt jumped by $16 trillion during COVID-19, a surge unlike anything seen before. Over the past year, the debt has grown by $6.3 billion a day. That’s over $262 million an hour. Let that sink in.
The debt isn’t just a domestic issue. It’s affecting America’s role on the global stage. Investors are starting to worry about the dollar’s stability.
If confidence in the U.S. economy weakens, it definitely will affect global markets, causing chaos everywhere. From equities to crypto, everything will shake. And the global economy itself might tumble.
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