The United States national debt has surpassed $34 trillion for the first time, according to data published by the Treasury Department. This milestone comes just weeks ahead of Congress' deadlines to agree on new federal funding plans. The total public debt outstanding, representing the cumulative borrowing by the US federal government throughout its history, reached $34.001 trillion on December 29.
The rising national debt is a cause for concern, as it is increasing during a period of relatively strong economic conditions and low unemployment. Critics argue that the growing debt poses risks to both the economy and national security. Maya MacGuineas, president of the Committee for a Responsible Federal Budget, referred to the record figure as a "truly depressing achievement."
The national debt has been a contentious issue between Republicans and Democrats, with each blaming the other for contributing to the debt's growth. The debt has surged in recent years due to federal spending programs, tax cuts, and costly Covid-19 relief packages. The current political standoff over budget issues has further heightened concerns.
The debt ceiling, which limits the government's borrowing capacity and often leads to political brinksmanship, was suspended through January 1, 2025, by an agreement reached in June. Fitch downgraded the US sovereign debt rating to AA+ from AAA in August, and Moody's warned of a potential removal of the US' last perfect AAA rating in November.
Lawmakers are facing deadlines to pass fiscal year 2024 department budgets in January and February, with the threat of a government shutdown looming. The rising debt and potential shutdowns have already impacted America's credit rating and could have broader economic implications.
The Peter G. Peterson Foundation highlighted the consequences of the high and rising debt, noting that within ten years, the federal government is expected to spend more on interest payments than on research and development, infrastructure, and education combined. Treasury projections indicate a need to borrow nearly $1 trillion more by the end of March. Critics emphasize the importance of addressing the debt to secure the country's economic future.
