The federal government has seen its gross national debt hit over $34 trillion, a record high, and it’s got people talking. Reports suggest the U.S. Treasury Department logged the country’s difficult financials. Understandably, this has led to political tension in a polarized Washington, with some parts of the government threatened with shutdown without an annual budget.
Last June, Republican lawmakers and the White House temporarily raised the nation’s debt limit to avoid a potentially historic default, but this agreement is set to expire in January 2025.
The debt surpassed $34 trillion earlier than pre-pandemic projections had suggested, mostly due to borrowing during the pandemic. In fact, the US government had expected to reach this milestone by FY 2029 instead of just a couple of years later, and the quick increase in the debt burden is causing concerns about the economy’s overall stability and the cost of servicing these debts.
While the national debt may not seem like a pressing concern for the US economy at this moment, certain economic forecasts suggest it could manifest as a risk in the future. Concerns about national security, important programs like Social Security and Medicare, and dysfunctional governance could all pose significant threats if not handled appropriately.
