After years of steadily increasing deficits and debt, federal spending has skyrocketed, taking U.S. debt to levels not seen since World War II.
According to the U.S. Treasury, the national debt is approaching $35 trillion.
What does that mean for the country, its citizens and the future?
Many economists warn that a rapidly growing debt load could diminish U.S. economic growth, restrict government spending on vital programs (e.g., military, Medicare, Social Security, etc.) and increase the likelihood of financial crises.
Currently, interest payments on the National debt consumes a quarter of the annual fiscal budget.
High debt-to-GDP ratios can slow down economic growth, leading to lower wages, increased inflation, and higher taxes.
While the National debt of $34 trillion figure seems daunting, it’s essential to consider inflation. As the economy grows, the debt naturally increases. However, addressing the fiscal budget deficit remains crucial.
The national debt indirectly affects citizens through policies, taxes, and government spending. It influences interest rates, inflation, and overall economic stability.
Over the long-term, managing the debt sustainably is vital for future generations. Balancing spending, revenue, and economic growth will determine the country’s financial health.
References: