The newest numbers from the U.S. Treasury Department show that the total national debt has now topped $37 trillion for the first time.
Insulated Aluminum Windows & Tilt And Slide Aluminum Windows
That’s about $107,000 in debt for each American — enough to buy two Tesla Model Y cars. If you stacked all that money in one-dollar bills and laid it out end to end, it would wrap around the Earth more than 14 times.
Why is U.S. debt skyrocketing?
There are two main reasons for this situation.
First, government spending has been really high. At the same time as cutting taxes, the U.S. has been spending a lot on things like the military, healthcare, and social programs—all of which can't be cut back easily. The recent "Inflation Reduction Act" pushed the debt ceiling up by $5 trillion, and our deficits are projected to grow by over $3.4 trillion (not counting interest) over the next ten years.
Second, the government isn’t bringing in enough money. In recent years, the amount of tax money the U.S. collects relative to its economy has generally fallen below what it used to be after World War II. Even though the U.S. has tried to boost revenue by imposing tariffs abroad, big tax cuts at home and shifts in the economy have made it hard for the government’s income to match its rising spending.
Insulated Aluminum Windows & Tilt And Slide Aluminum Windows
Can the massive debt be repaid?
In 2024, the U.S. economy topped $29 trillion, and the dollar still holds its spot as the world's main reserve currency. U.S. Treasuries remain some of the safest and most popular investments around. But there's a catch—covering the interest on all that borrowing is getting more expensive. In May, Moody's lowered the U.S. credit rating from Aaa to Aa1, mainly because of the rising amount of debt and interest payments.
Before that, Fitch and Standard & Poor's already cut the U.S. rating. So now, all three big agencies consider the U.S. to have lost its AAA status.
Insulated Aluminum Windows & Tilt And Slide Aluminum Windows
What if the debt can't be repaid?
The Brookings Institution, a well-known U.S. think tank, warns that if investors start to doubt whether America can pay back its debts, it could cause a chain reaction. Yields on Treasury bonds might jump, the dollar could weaken, import prices might climb, and both stock and bond markets could fall sharply at the same time.
In the global financial system, the dollar's role is so important that one thing can set off a lot of other problems. The IMF says nearly 60% of all overseas exchange reserves are held in dollars, and almost everything like oil, gold, and other commodities is priced in dollars. If the U.S. loses control over its finances and its debt spirals out of control, it would be like setting off a big explosion at the core of the financial world. This isn't just a problem for America; it’s a risk that could affect the entire global economy.
While a sudden collapse of U.S. debt isn’t likely in the short term—despite some doomsday predictions—the bigger the debt gets, the less room there is to maneuver financially. Thanks to its economic size and the dominance of the dollar, the U.S. can probably keep paying its debts for now, but someday it might have to face really tough choices.
Insulated Aluminum Windows & Tilt And Slide Aluminum Windows，Insulated Aluminum Windows & Tilt And Slide Aluminum Windows