$38 trillion and growing: The national debt interest costs are “harming the economy for every American”

If the federal government shutdown wasn’t bad enough, the United States national debt has topped $38 trillion according to a report published by the Treasury Department on Wednesday. It was only just back in August when it surpassed $37 trillion.

That’s a $1 trillion jump in just over two months, the fastest increase outside of the covid-19 pandemic and twice the pace since 2000 according to Michael Peterson, CEO of Peter G. Peterson Foundation.

“Reaching $38 trillion in debt during a government shutdown is the latest troubling sign that lawmakers are not meeting their basic fiscal duties,” he said in a statement.

Interest payments on US national debt are a drag on the economy

According to an analysis by the Peterson Foundation, deficit spending and the cost of rising interest along with financial impact of the government shutdown are behind the accelerating rise of the US national debt. “Along with increasing debt, you get higher interest costs,” Peterson explained.

The United States has paid $4 trillion on interest payments on the national debt over the past decade. However, they are now the fastest-growing part of the federal budget running around $1 trillion per year. Peterson estimates that interest payments will climb to $14 trillion over the next ten years.

The head of the nonpartisan watchdog dedicated to fiscal sustainability warns that the cost of the growing interest payments on the US national debt will “crowd out important public and private investments in our future, harming the economy for every American.”

Experts say that the swelling national debt exerts upward pressure on borrowing costs for businesses and households as well as pushing up inflation. Workers could at the same time see lower wages due to companies having less money at their disposal to invest.

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