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The United States’ debt has reached levels that seemed unthinkable just a short time ago. The US Treasury confirmed that the public debt of the world’s largest economy has surpassed historic levels, and the pace of its growth is raising growing concerns among economists.
The balance sheet released shows that the United States’ total public liabilities reached $40.047 trillion on Tuesday. This amount consisted of $32.266 trillion in Treasury securities and $7.782 trillion in intra-governmental debt.
The administrations of Donald Trump and Joe Biden are responsible for the doubling of liabilities. When Trump first took office in the White House in 2017, the US debt reached $19.95 trillion, Reuters reported. Since then, the debt has more than doubled.
The pandemic and fiscal policy have fueled debt
About one-third of this increase occurred during the COVID-19 pandemic, when the federal government borrowed to finance its response to the health crisis. The rest stemmed from fiscal decisions by both administrations and the persistent gap between tax revenues and federal spending.
Maya MacGuineas, chairwoman of the Committee for a Responsible Federal Budget, commented on the scale of the problem, citing Reuters. She noted that the consequences of such high debt extend far beyond the government’s financial records.
“The $40 trillion debt doesn’t just exist on the government’s books; it’s felt throughout the economy and is hitting citizens in one way or another… The more we borrow, the more we fuel inflation, cut other budget priorities, and expose ourselves to crises at home and unrest abroad,” MacGuineas said.
Four times the debt in less than 20 years
The Committee Chair noted that the jump from $39 trillion to $40 trillion took less than five months. Over the past two decades, the government’s liabilities have quadrupled. For comparison, the US debt first exceeded the $1 trillion mark in 1981.
According to the Committee, the pace of new debt is influenced by decisions made by both Biden and Trump. Reuters also noted that during his second term, Trump is building an image of his administration as focused on reducing budget spending. During the election campaign, the current president also announced and promised lower debt and public spending.