The U.S. national debt hit a milestone Friday, when it crossed the $33 trillion mark, ahead of what could be a clash around spending.
- The U.S. national debt hit a record high $33 trillion on Friday, according to data from the Treasury Department.
- The national debt has grown every year since 2001 as the government has spent more than it collected in taxes and other revenue.
- A higher national debt means the government has to spend more to service the debt, and restricts the ability of the government to respond to future recessions.
The exact figure—$33,044,858,730,468.04 according to the Treasury Department’s extremely precise accounting—is 54% higher than it was five years ago and highlights the debt burden at a time when the government is consistently spending more than it takes in, as it has every year since 2001.
The U.S. is on track for a spending deficit of $1.7 trillion in 2023, an acceleration from the $1.4 trillion deficit of 2022, the Congressional Budget Office estimated earlier this month. That deficit would be equal to 6.3% of the nation’s entire economic output as measured by Gross Domestic Product, according to the latest estimates from the Bureau of Economic Analysis, higher than the deficit in 2019, which accounted for 4.6% of the GDP.
The growing national debt is the centerpiece of a looming clash between President Joe Biden and Republicans in Congress over the federal budget. Lawmakers have until Sept. 30 to pass a budget or else parts of the government will shut down. Republicans have demanded spending cuts, and are clashing amongst themselves over what spending plan they’ll propose, according to press reports.
That swelling debt is also one reason Fitch downgraded the U.S. government’s credit rating earlier this year. The debt is costlier to service the higher interest rates go, and some economists speculate that interest rates in the coming decades will typically be higher than the ultra-low ones that prevailed before the pandemic.
Crucially, the higher the national debt, the less room the government has to use deficit spending to respond to future recessions, like the one that hit along with COVID-19. In 2020, the government racked up debt sending out stimulus checks, enhanced unemployment benefits, and other measures to prop up the economy.
Economists credit that spending with helping the economy recover quickly and add jobs at a pace unheard of following past recessions—a response that will grow harder to repeat the higher the debt goes.