Debt alarm: US national debt hits record $37 trillion, pace doubles with trillion added every five months

The US government’s gross national debt has crossed $37 trillion, setting a new record that underscores the growing strain on the country’s finances and adding to the cost pressures facing taxpayers, according to the latest Treasury Department report issued Tuesday.The milestone has arrived years earlier than pre-pandemic forecasts. In January 2020, the Congressional Budget Office (CBO) projected that gross federal debt would exceed $37 trillion only after fiscal year 2030. But the figure accelerated as the multi-year Covid-19 pandemic, starting in 2020, shut down much of the US economy, prompting heavy federal borrowing under then-President Donald Trump and former President Joe Biden to stabilise the economy and support recovery.More recently, debt levels have been driven higher by additional government spending following Trump’s signing into law of Republicans’ tax cut and spending package earlier this year. CBO estimates that the law will add $4.1 trillion to the national debt over the next decade.Michael Peterson, chair and CEO of the Peter G. Peterson Foundation, said in a statement that government borrowing pushes interest rates upward, “adding costs for everyone and reducing private sector investment.

Within the federal budget, the debt crowds out important priorities and creates a damaging cycle of more borrowing, more interest costs, and even more borrowing.”Wendy Edelberg, a senior fellow in Economic Studies at the Brookings Institution, noted that Congress plays a decisive role in shaping spending and revenue policies. She said the impact of the Republicans’ tax law “means that we’re going to borrow a lot over the course of 2026, we’re going to borrow a lot over the course of 2027, and it’s just going to keep going.”The Government Accountability Office has outlined several ways rising national debt affects Americans, including higher borrowing costs for mortgages and cars, lower wages as businesses invest less, and more expensive goods and services.Peterson highlighted how debt milestones are “piling up at a rapid rate.” The US reached $34 trillion in January 2024, $35 trillion in July 2024, and $36 trillion in November 2024.

“We are now adding a trillion more to the national debt every five months,” he said, noting this is more than twice as fast as the average pace over the last 25 years.According to the Joint Economic Committee, at the current average daily growth rate, another trillion dollars will be added to the debt in about 173 days.Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said in a statement, “hopefully this milestone is enough to wake up policymakers to the reality that we need to do something, and we need to do it quickly.”