(Central News Agency, Washington, 19th, Comprehensive Foreign News Report) According to data released by the U.S. Treasury Department today, the U.S. national debt exceeded the $40 trillion mark, highlighting the federal government's increasingly heavy borrowing and interest costs. Some organizations believe that if there is no further spending or tax reform, it may exceed US$50 trillion within 6 years.
The U.S. Treasury Department’s daily financial report shows that the U.S. national debt reached $40.05 trillion on August 18, more than double the size in 2017. The federal debt has ballooned as government spending exceeds revenue, forcing the U.S. government to borrow more money to fill the fiscal gap.
The debt-to-US GDP ratio continues to rise and will reach 120% in 10 years
The Wall Street Journal pointed out that it is widely expected that the proportion of U.S. debt in gross domestic product (GDP) will continue to rise. According to estimates from the U.S. Congressional Budget Office (CBO), this proportion will reach 120% in 10 years, and is likely to rise to 175% in 30 years.
CBS News pointed out that the national debt has exceeded US$40 trillion, and it is expected that interest payments alone will exceed US$1 trillion this year. As the government continues to raise debt, interest payments account for an ever-increasing proportion of total government expenditures, creating a compound interest effect that further pushes up debt. The annual interest payments alone in the United States now exceed the budgets of the defense or Medicare (Medicare).
"It's clear that the problem is accelerating because, like any debt problem, the longer it's left unaddressed, the worse it gets," Michael Peterson, CEO of the Peter G. Peterson Foundation, told CBS. "Many administrations and many Congresses have taken steps in the wrong direction."
The Peterson Foundation estimates that if the United States does not implement spending or tax reforms, the national debt could reach $50 trillion within six years.
What factors are driving up federal debt?
As the U.S. population ages, the number of people receiving Social Security benefits and Medicare increases, making these programs increasingly more expensive; at the same time, interest payments increase government spending as interest rates rise. Net interest expenses will be close to US$1 trillion in 2025, accounting for nearly 14% of total U.S. government expenditures.
On the other hand, a series of tax cuts over the past 20 years have reduced government revenue. The Congressional Budget Office estimates that the "One Big Beautiful Bill" promoted and passed by the Trump administration last year is expected to increase the U.S. national debt by $4.2 trillion by fiscal year 2034.
Major economic crises, including the 2008 global financial crisis and the COVID-19 epidemic, have also contributed to the sharp rise in national debt.
Mortgage, car loan and credit card debt interest rates may soar across the board
The Peterson Foundation stated that approximately 80% of U.S. Treasury bonds are held domestically, of which more than two-thirds are held by domestic lending institutions and the Federal Reserve, while the remainder are held by foreign investors.
Rising federal debt could also take a major hit on taxpayers because as the government issues more debt to finance spending, it must offer higher yields to attract investors, which could further push up interest rates on mortgages and other credit products.
"If U.S. Treasury yields go up, that means your mortgage rates are going to go up, your car loan rates are going to go up, your credit card rates are going to go up," Peterson said.
Analysts believe U.S. debt growth is unlikely to slow. "We are heading in the wrong direction," said Dean Baker, co-founder of the Center for Economic Policy Research (CEPR).
If the AI bubble bursts or the military continues to be built, the U.S. finances are in danger of a comprehensive crisis
Baker said that the increase in military spending has increased the financial burden on the United States, and the impact of the Iran war on prices cannot be underestimated. He warned that if the AI bubble bursts, investors may withdraw funds from the United States in large quantities.
Analysts told CBS that rising federal debt could weaken the United States' ability to deal with future economic shocks.
