Aug. 20 (UPI) — The national debt hit $40 trillion Tuesday, a record high, signaling that the government is borrowing at a record pace.
The debt has risen thanks to government borrowing to keep pace with rising costs of the military, social safety net programs and tax cuts.
“On our current path, we’re going to be at $50 trillion in just six years. If you look backward, we were at $20 trillion less than 10 years ago,” Michael Peterson, CEO of the Peter G. Peterson Foundation, a fiscal watchdog group, told CNN. “We’re really putting our economy and our country’s future in jeopardy.”
This year, the country is on track to borrow more than $2 trillion to pay for the war in Iran, tax cuts from 2025 and rising interest payments to investors, The New York Times reported.
“The scariest thing about this is how we’re starting to see the debt spiral begin,” said Marc Goldwein, senior policy director for the Committee for a Responsible Federal Budget.
About 10,000 Baby Boomers are retiring per day, and people are living longer, which forces the government to pay for more Social Security and Medicare. But there aren’t enough people in the workforce to contribute to those programs.
President Donald Trump’s tax cuts in 2017 and 2025, as well as Trump’s and President Joe Biden’s COVID-19 pandemic relief payments have eaten away at government revenues.
It’s not just the amount of debt, but the pace that concerns experts. The Congressional Budget Office in May 2023 projected that the United States would cross the $40 trillion mark in fiscal year 2028. The government has added $1.8 trillion more of deficit in just the past five months.
Because of the rising debt and interest rates, the government has had to make large interest payments, CNN said. They are expected to be more than $1 trillion this year, another record.
The government is spending more on interest payments than on national defense and 50% more than on children’s programs, CNN reported.
“We’re spending significantly more to service past debt than to invest in our future,” Goldwein said. “Our debt is begetting more debt. It creates a vicious cycle.”
“$40 trillion of debt doesn’t exist solely on the government’s ledgers; it is felt throughout the economy and finds its way to the pocketbooks of people one way or another,” Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said in a statement.
“The more we borrow, the more we exacerbate inflation, squeeze out other priorities in the budget, and leave ourselves vulnerable to emergencies at home and turmoil abroad,” MacGuineas said.
On Wednesday, the Treasury Department announced it would double its buybacks of long-term bonds this fall.
This month, 30-year Treasuries saw the highest yield since 2001, which is a sign that investors are demanding more compensation to hold federal debt.
The United Kingdom, France, Germany and Japan are also seeing very high bond yields.