Get a brief on the top business stories of the week, plus CEO interviews, market updates, tech and money news that matters to you. Even more worrisome is that the spike in interest rates over the past year and a half has made the cost of servicing the national debt more expensive. “This is the trickle-down debt — driven overwhelmingly by repeated Republican giveaways skewed to big corporations and the wealthy,” Michael Kikukawa, White House assistant press secretary, said in a statement provided to FOX Business after the debt surpassed $34 trillion. “This is a warning shot across the U.S. government’s bow that it needs to right its fiscal ship,” Sean Snaith, an economist at the University of Central Florida, told FOX Business. “You can’t just spend trillions of dollars more than you have in revenue every year and expect no ill consequences.” Economist Peter Morici breaks down what the national debt is, why it ballooned to more than $34 trillion and what it means for Americans.
“I don’t want to speak for the White House, but I think there’s consensus,” Senate Majority Leader John Thune told reporters Tuesday after a meeting at the White House. “A nation saddled with debt will have less to invest in its own future,” the Peter G. Peterson Foundation said. The White House has also tried to blame Republicans for the astronomical rise in debt in recent years. Biden has repeatedly defended the spending by his administration and boasted about cutting the deficit by $1.7 trillion. Most federal debt is owed to domestic holders, but foreign ownership is much higher now than it was about 50 years ago. It would be one thing if our tax code was designed to fund all the promises we are making.
- The debt limit was reinstated Jan. 2, following its suspension by Congress in the Fiscal Responsibility Act of 2023.
- America faces many challenges including rising inequality, unaffordable healthcare, climate change, education affordability, and unpredictable security threats.
- The Peter G. Peterson Foundation is a nonprofit, nonpartisan organization that is dedicated to increasing public awareness of the nature and urgency of key fiscal challenges threatening America’s future, and to accelerating action on them.
- In such cases, the Treasury obtains cash to make those payments by borrowing from the public, but the disbursements reduce the funds’ balances, which are held in the form of special-issue Treasury securities.
But the Senate will have to agree to that increase, and it’s unclear at this point whether the Republican-led chamber will do so. GOP leadership in both the House and Senate continue to negotiate on a path forward, with the latest meeting Tuesday at the White House. The debate over the debt ceiling comes shortly after an internal battle that remains unresolved for Democrats over Senate Minority Leader Chuck Schumer’s handling of a government shutdown. Schumer voted to approve the GOP-led bill to avoid a shutdown along with nine other Senate Democrats, sparking outrage from within the party and some calls for him to step down in leadership.
Military Spending and Interest Paid
As of the latest report by the Treasury, the total US National Debt stands at $loading trillion. Trump had previously demanded that a provision raising or suspending the debt limit — something that his own party routinely resists — be included in legislation to avert the last potential government shutdown. An analysis released on Monday by the Bipartisan Policy Center estimates that the U.S. could run out of cash by mid-July if Congress did not raise or suspend the nation’s debt limit.
Our tool uses the latest and past records to provide a real-time US National Debt tracker. This tool uses official historical reports from the US Treasury to provide an accurate, real-time prediction of the total US National Debt. It also tracks the US government spending in real-time based on accurate prediction models. The House added a $4 trillion increase in the debt ceiling as part of a Republican budget plan that sets the stage for extending the individual tax cuts passed in Trump’s first term. The CBO estimate came after the Bipartisan Policy Center projected on Monday that the U.S. could default on its debt between July and October without congressional intervention. The Treasury Department is also expected to release a projected X-date in the coming weeks.
Debt held by government accounts is issued to the federal government’s trust funds and other federal accounts for internal transactions. Trust funds for Social Security, military retirement, civil service retirement and disability, and Medicare account for most of that debt. If the debt limit was not raised or suspended, the Treasury would not be authorized to issue additional debt other than to replace maturing or redeemed securities. That restriction would ultimately lead to delayed payments for some government activities, a default on the government’s debt obligations, or both. Those actions could result in distress in credit markets, disruptions in economic activity, and rapid increases in borrowing rates for the Treasury.
Republicans join Senate Democrats to rebuke Trump tariffs on Canada
It’s not yet clear how hard Democrats will fight Republicans to try to pull concessions if the GOP is unable to raise the ceiling through reconciliation. The consequences of failing to raise the ceiling are astronomical and could cause the government to miss payments on its debt once it runs out of funds through the “extraordinary measures” the Treasury Department has been taking. The $36 trillion gross federal debt equals debt held by the public plus debt held by federal trust funds and other government accounts. In very basic terms, this can be thought of as debt that the government owes to others plus debt that it owes to itself. When the federal government spends more than it takes in, it has to borrow money to cover that annual deficit.
Total GDP
By that time, the government would no longer have enough of a financial cushion to pay all its bills after exhausting its “extraordinary measures” the accounting maneuvers used to stretch existing funds. In August and September, the Treasury typically borrows more than it does in other months, in large part to finance new student loans that are originated in those two months. A wide range of government agencies hold US national debt; two major examples are Social Security funds and federal employee retirement funds. As of the third quarter national debt clock of 2024, debt held by the public was about $28 trillion, and intra-governmental holdings were about $7 trillion. The National Debt Clock is a billboard-sized running total display that shows the United States gross national debt and each American family’s share of the debt. As of 2017update, it is installed on the western side of the Bank of America Tower, west of Sixth Avenue between 42nd and 43rd Streets in Manhattan, New York City.
The debt limit—commonly called the debt ceiling—is the maximum amount of debt that the Department of the Treasury can issue to the public or to other federal agencies. The amount is set by law and has been increased or suspended over the years to allow for the additional borrowing needed to finance the government’s operations. Worldometer has developed an algorithm which calculates the current estimated rate of change of the amount of debt outstanding in between the daily US Treasury updates. The formula components are recalculated daily as the latest official US National Debt data is published, so that the algorithm continuously adjusts itself accordingly. In recent days, Republicans in Congress have been working to reconcile the two approaches as they look to make headway on the complicated process to implement the president’s agenda. House Speaker Mike Johnson and Senate Majority Leader John Thune met Tuesday afternoon with top tax leaders as they work to unite behind a plan on the path forward.
Foreign central banks and foreign private-sector entities also play a crucial role in absorbing the fast-growing US national debt. Our third FRED graph shows debt held by foreigners (red dotted line), which doubled from about $4 trillion in 2010 to over $8 trillion in 2024. The gold dashed line is total debt held by private investors minus debt held by private foreign investors, which equals debt held by private domestic investors. But taking a hard line against the debt limit if Republicans cannot pass it on their own, which comes with tremendous potential costs to the economy, is a much bigger risk than a government shutdown.
Democrats have pushed Republicans to work across the aisle to raise the debt ceiling and pushed for them to negotiate. “This is the leverage they’ve got, maybe with the exception of the next big budget bill, this may be their best opportunity to try to extract something out of it. But the question is, Republicans know that the Democrats don’t want to tank the economy, so how much are they willing to give knowing that at least a number of Democrats are likely to come on board and protect the debt ceiling? Democrats have grown increasingly frustrated with their lack of ability to shape policy in the congressional minority and to combat the Trump administration and some parts of the party hoped to use the looming shutdown to gain policy concessions out of Republicans. However, that figure refers to a reduction in the national deficit between fiscal years 2020 and 2022; while the deficit did shrink during that time period, that is largely because emergency measures put into place during the COVID-19 pandemic expired.
Senator dishes details on budget workaround for Trump tax cuts: ‘This is step one’
- “You can’t just spend trillions of dollars more than you have in revenue every year and expect no ill consequences.”
- The National Debt Clock is a billboard-sized running total display that shows the United States gross national debt and each American family’s share of the debt.
- Our tool uses the latest and past records to provide a real-time US National Debt tracker.
Government payments to millions of families probably would go unpaid, including to Social Security beneficiaries, veterans and military families. “The Treasury has already reached the current debt limit of $36.1 trillion, so it has no room to borrow under its standard operating procedures,” according to the CBO report. The debt limit was reinstated Jan. 2, following its suspension by Congress in the Fiscal Responsibility Act of 2023. Washington would risk defaulting on its debt unless Congress and Republican President Donald Trump agree to lift the borrowing limit or abolish the debt ceiling concept altogether.
The Peter G. Peterson Foundation is a nonprofit, nonpartisan organization that is dedicated to increasing public awareness of the nature and urgency of key fiscal challenges threatening America’s future, and to accelerating action on them. To address these challenges successfully, we work to bring Americans together to find and implement sensible, long-term solutions that transcend age, party lines and ideological divides in order to achieve real results. Historically, the largest deficits were caused by increased spending around national emergencies like major wars or the Great Depression. But Republicans must work with us to protect Social Security, Medicare, and Medicaid,” said Pennsylvania Rep. Brendan Boyle, the ranking Democrat on the House Budget Committee. Given these consequences, Congress and presidents have always found a way, even at the last minute, to avoid a default.
The outlook for the federal debt level is bleak, with economists increasingly sounding the alarm over the torrid pace of spending by Congress and the White House. Interest payments on the debt for the government’s fiscal year, which begins in October, now exceed the costs of Medicare and the defense budget. The US National Debt is the total amount of money that the federal government owes to creditors.