The federal government’s gross national debt crossed $34 trillion for the first time, paving the way for potential political and economic challenges.
In June 2023, the U.S. debt limit was temporarily lifted, avoiding a default, per WFAA. This agreement expires in January 2025.
In the Congressional Budget Office’s January 2020 projections, gross federal debt was expected to hit the $34 trillion milestone in 2029. However, pandemic shutdowns and heavy government borrowing to stabilize the economy accelerated the debt accumulation.
“So far, Washington has been spending money as if we had unlimited resources,” Sung Won Sohn, an economics professor at Loyola Marymount University, told WFAA. “But the bottom line is there is no free lunch,” he said, “and I think the outlook is pretty grim.”
Despite the record-high level, investors continue to lend to the federal government, WFAA reported, noting this suggests the national debt is so far not a significant weight on the U.S. economy. This lending allows the government to keep spending on programs without raising taxes.
Still, servicing the debt could grow too demanding over time, impacting programs and national security.
According to Michael Peterson, CEO of the economic growth-focused Peterson Foundation, “debt will continue to skyrocket as the Treasury expects to borrow nearly $1 trillion more by the end of March.”
“Adding trillion after trillion in debt, year after year, should be flashing a red warning sign to any policymaker who cares about the future of our country,” Peterson said.
The milestone debt level comes as some Pentagon officials express concern that the U.S. is depleting its remaining funds needed to shore up the country’s military stock, as previously reported by The Dallas Express.
While the elevated debt has yet to show signs of significant economic impact, Shai Akabas, director of economic policy at the Bipartisan Policy Center, told WFAA it could lead to “spikes in interest rates” or “a recession that leads to lots more unemployment.”
“It could lead to another bout of inflation or weird going on with consumer prices — several of which are things that we’ve experienced just in the past few years,” Akabas added.