The U.S. debt now exceeds the country's GDP. Should we worry?
Summary
The U.S. national debt has grown larger than the country’s total economic output, or GDP, for the first time since World War II. This increase is due to factors like tax cuts, higher government spending, and costs related to an aging population. Experts warn the growing debt could cause economic risks, especially if it continues to rise.Key Facts
- The public debt reached $31.27 trillion at the end of April, slightly exceeding U.S. GDP of $31.22 trillion.
- Debt last exceeded GDP only briefly during World War II and early in the COVID-19 pandemic when the economy shrank.
- The recent rise in debt is caused by tax cuts, increased spending on interest payments, and expensive programs like Medicare and Social Security.
- Annual interest payments on the national debt have passed $1 trillion, now costing more than defense or Medicare spending.
- The total gross national debt, including money the government owes itself, is near $39 trillion.
- Since the 2008-09 financial crisis, debt has increased from about $5 trillion due to spending more than the government collects in revenue.
- The Congressional Budget Office projects debt held by the public will grow to $53 trillion by 2036, or 120% of GDP.
- Some experts suggest reducing the budget deficit to 3% of GDP to stabilize the debt and protect the economy.
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