The U.S. national debt topped $31 trillion for the first time on Monday, a milestone that comes nine months after it first hit $30 trillion.
The total public debt outstanding is now just over $31.1 trillion, according to data from the Treasury Department. Debt held by the public, which excludes intragovernmental borrowing, stands at roughly $24.3 trillion.
The latest high mark in the nation’s debt burden prompted a fresh round of warning from budget watchdogs, particularly given rising interest rates, which have been driven to levels not seen in years by the Federal Reserve’s efforts to rein in inflation.
The national debt has surged in recent years, driven by trillions of dollars in deficit-financed spending in response to the coronavirus pandemic as well as new spending programs and the 2017 Republican tax cuts.
A decade ago, the debt totaled $16.2 trillion. Five years ago, it was $20.3 trillion.
The Committee for a Responsible Federal Budget, a nonprofit that advocates for deficit reduction, said the Congress and President Joe Biden have signed off on $1.9 trillion in new borrowing this year, and Biden has approved $4.9 trillion in new deficits since taking office.
“Even more troubling than where the debt stands now is where it’s going,” Maya MacGuineas, the group’s president, said in a statement. “Our nation faces significant fiscal challenges in the near term. Medicare is only six years from insolvency, and Social Security insolvency is only 12 years away. Yet policymakers have put forth no plan to put either program on strong fiscal footing.”
Years of historically low interest rates led many economists and analysts to argue that the increased borrowing was eminently affordable, with some emphasizing that not all deficit spending is the same — and some may be worthwhile given the potential economic or social benefits.
At the same time, budget analysts have long warned that rising rates could dramatically increase the cost of U.S. borrowing, eventually making the government’s interest costs the most expensive item in the federal budget.
Given the rise in interest rates, “[t]he deficit path is almost certainly too high,” Jason Furman, a Harvard economist and former chair of the Council of Economic Advisers under President Obama, told The New York Times. “We were sort of at the edge of ‘OK’ before, and we are past ‘OK’ now.”
Alan Rappeport and Jim Tankersley of the Times note that Biden and officials in his administration have played up the deficit reduction taking place on their watch and have made clear they would like to enact additional deficit-cutting tax hikes on top earners and large corporations. But Biden officials “also say they are comfortable with the debt and deficit levels in the administration’s forecasts and do not see the nation as anywhere close to a fiscal crisis,” Rappeport and Tankersley write. “They say the government’s inflation-adjusted interest costs — their preferred metric for the debt burden — remain historically low as a share of the economy.”