U.S. public debt has exceeded $40 trillion for the first time, according to data released yesterday, Wednesday, by the Treasury Department, while borrowing rates are rising.
Following the latest bond issuance on Tuesday, the U.S. federal government’s debt now stands at $40.047 trillion, due to increased borrowing linked to health care and Social Security spending, as well as the cost of servicing the debt.
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This is a faster increase than expected. The Congressional Budget Office (CBO) had previously projected that the U.S. public debt would reach $39.4 trillion by the end of this year.
The refund of funds collected from customs duties to companies, following the Supreme Court’s decision in February to overturn a large portion of those duties, further deepened the deficit.
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The debt-to-GDP ratio stands at 125% and continues to rise despite ongoing growth in the world’s largest economy.
The ongoing rise in U.S. public debt comes as borrowing costs in recent years have reached levels not seen since the financial crisis.
At that time, U.S. debt stood at just over 64% of GDP, according to data from the Federal Reserve (Fed).
The U.S. government has not presented a balanced budget since the beginning of the century, and the deficit has fluctuated between 5.2% and 6.2% of GDP over the past four years, while it had even reached 15% in 2020, the year of the COVID-19 pandemic, according to Fed data.
The U.S. federal government now has a deficit growth rate that is “unsustainable,” according to Jessica Riddle, a budget expert at the Brookings Institution, who estimates that the annual deficit has reached $2 trillion in recent years.
SOURCE: CNA
