US National Debt Surpasses $32 Trillion, Reaching New Record

This milestone comes less than two weeks after President Joe Biden signed a bill that temporarily suspended the $31.4 trillion debt limit, preventing a potential US debt default. The suspension allows the government to borrow unlimited funds until January 1, 2025, when the debt ceiling will be reinstated. Consequently, the government can continue financing domestic services, such as social security and Medicare, by accumulating more debt through borrowing from abroad.

The decision to suspend the debt ceiling was made following repeated warnings from the US Treasury that failing to do so would result in a default on the country's financial obligations. The debt limit had been reached in January, leaving the Treasury with limited options to prevent a default, which was projected to occur in early June. This led to a heated and protracted debate between Republicans and Democrats regarding spending priorities, putting the approval of the measure at risk.

Shortly after the removal of the debt ceiling, federal borrowing surged by approximately $400 billion on the first business day.

According to experts, the $32 trillion milestone was reached nine years earlier than pre-COVID-19 pandemic forecasts had predicted. To avert another crisis, they emphasize the need for the government to address the underlying factors contributing to the debt.

Michael A. Peterson, head of the Peter G. Peterson Foundation, stated, "As we race past $32 trillion with no end in sight, it’s well past time to address the fundamental drivers of our debt, which are mandatory spending growth and the lack of sufficient revenues to fund it." Projections by the foundation suggest that the US could accumulate an additional $127 trillion in debt over the next 30 years, with interest costs accounting for approximately 40% of the country's federal revenues by 2053.