US debt hits historic high
US national debt passed a record $32 trillion for the first time ever this week, data released on Friday by the Treasury Department shows.
The milestone was reached less than two weeks after President Joe Biden signed a bill suspending Washington’s $31.4 trillion limit, averting what would have been a first-ever US debt default. The measure allowed the country’s government to borrow unlimited funds until January 1, 2025, when the debt ceiling suspension ends. This means the government can continue to pay for services at home, such as social security and Medicare, by borrowing money abroad and effectively amassing even more debt.
The ceiling was scrapped following repeated warnings from the US Treasury that unless the step was taken, the country would default on its obligations. The borrowing limit was reached back in January, and the Treasury had a limited arsenal of measures it could implement to stave off the default, which was expected to happen in early June. The warnings prompted a heated, months-long debate between Republicans and Democrats over spending priorities, which put the measure’s approval at risk.
On the first business day after the debt ceiling was scrapped, federal borrowing surged roughly $400 billion.
According to the New York Times, the $32 trillion mark was reached nine years sooner than pre-Covid-19 pandemic forecasts had projected. Experts say that, in order to avoid another crisis, the government needs to address the factors driving the debt.
“As we race past $32 trillion with no end in sight, it’s well past time to address the fundamental drivers of our debt, which are mandatory spending growth and the lack of sufficient revenues to fund it,” Michael A. Peterson, head of the Peter G. Peterson Foundation, told the news outlet. According to the foundation’s projections, the US could amass another $127 trillion in debt over the next 30 years, with interest costs taking up roughly 40% of the country’s federal revenues by 2053.
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