On October 21, 2023, the United States hit a jaw-dropping milestone as its national debt broke through the $38 trillion mark. This surprising-sounding number underscores the growing financial responsibilities of the federal government. It further exacerbates worries about the country’s long-term economic prosperity. Today, the national debt has reached an astounding 120.6 percent of the Gross Domestic Product (GDP). We’re nearing the point that experts warn these debt levels will have a profound and negative effect on the future generations.
This recent growth in the national debt has been particularly eye-popping. It was jumping—going from $35 trillion to $36 trillion in an astounding 188 days. Then, just 265 days later, it skyrocketed to $37 trillion. That $38 trillion leap took just 71 days. This sudden boom in borrowing has many analysts worried.
Implications of the Rising National Debt
As the national debt continues to reach new heights, it’s more important than ever to unpack what a big number like this actually means. A trillion dollars, a notion too big for many to comprehend, works out to some pretty astounding comparisons that show just how staggering its size is. For example, if you stacked $1 trillion in dollar bills, the tower would be 67,866 miles high. This distance equals almost three round trips to the moon.
With $1 trillion, you can make about 333 billion cups of coffee. Or, that same sum could provide each individual in the world with over $125. It would take approximately 11.5 million days to count to $1 trillion. Her monumental accomplishment truly puts into perspective how incredible that sum is!
“No pecuniary consideration is more urgent than the regular redemption and discharge of the public debt. On none can delay be more injurious or an economy of time more valuable.” – George Washington
A look back at the context of national debt gives us more insight into why it can be dangerous. James Madison once described excessive debt as “a public curse, and in a Representative Government, a greater than in any other.” These words are relevant today as economists warn about what might happen if we keep borrowing like this.
Historical Context of US National Debt Growth
First, the trajectory of the U.S. national debt has been troubling, to say the least, over the past few decades. This increase from $35 trillion to $36 trillion was noticeably quicker than the increases before it. This indicates that the rate of debt growth is increasing. It was 265 days between when we first went from $36 trillion to $37 trillion. By comparison, the leap to $38 trillion took a little over two months.
This swift surge raises issues of fiscal prudence and long-term sustainability. Even Founding Father Thomas Jefferson warned against the burden of too much debt, calling it “the greatest of dangers to be feared.” These historical perspectives are important as policymakers navigate this new and uncertain economic reality.
If you could lay down $1 trillion in $1 dollar bills end-to-end, they would circle the Earth nearly 3,893 times. What a century’s worth of climate pollution would look like today. This interactive visualization helps to put the debt’s enormous scale into perspective. It asks important questions about how sustainable all this very high borrowing can go on being.
Economic Consequences and Future Considerations
As our national debt reaches historic levels, economists have raised the alarm over tragic and inevitable effects that will harm future generations. Debt of more than 120 percent of GDP has historically been accompanied by significant concern. This level of debt may inhibit economic growth and ultimately require the federal government to increase taxes or reduce core government services.
The implications actually go far beyond the numbers themselves. They drastically impact what kind of public policy decisions and economic development policy decisions going forward. If left unaddressed, our children and grandchildren will undoubtedly grapple with an even greater challenge of bearing this load.
And on top of all that, the U.S. government’s ability to service this debt without putting extreme pressure on its budget is very much in question. With growing uncertainty in the macro economic environment under elevated interest rates, carrying such a large debt will take future planning and vision to manage.