How Bad is the US Debt Crisis Going?

The national debt of the United States is a continuously increasing monster. At $36 trillion, this is the highest level in history and shows no signs of slowing down. Over 16 years, the debt-to-GDP ratio has doubled, now standing at 121%. Compared to World War II, when this ratio reached a peak of 119%. At that time, the country was fighting against a global totalitarian regime. What about now? Debt is soaring due to poor financial planning and incessant spending. Since 2008, federal debt has skyrocketed by 26.6 trillion dollars, nearly triple the 14.6 trillion dollar economic growth. That's a deficit of 12 trillion dollars. Economists predict an even worse situation. The Congressional Budget Office (CBO) states that the debt-to-GDP ratio could reach 131% by 2034, assuming the economy avoids a recession. Debt is eroding the U.S. budget The debt repayment is draining the United States. Every day, the government spends over 1 billion dollars just to pay interest. This year, the projected cost will reach 1 trillion dollars, more than the amount this country spends on defense. Think about it. The United States is pouring more money into interest on debt than into border protection or military upgrades. The situation is even worse due to high interest rates. Since the pandemic hit, the Federal Reserve has raised interest rates, making borrowing more expensive. This pushes up costs everywhere, from mortgages to groceries. Currently, the debt-to-GDP ratio is 125%. Experts believe that this ratio could reach 200% in a few years. That means the debt will double the scale of the entire economy. When that happens, the government will spend more on interest payments than on things people really need, like infrastructure and education. On average, each American owes $108,000. That's the amount of money being withdrawn from investments that could build a better future. Instead of funding roads, schools, or new technology, this money will be transferred to creditors. Trump's second term faces a storm President Donald Trump is entering his second term with an economic ticking time bomb. His administration is struggling to control spending. Join the Ministry of Government Efficiency, a new initiative led by Elon Musk and Vivek Ramaswamy. Elon said they could cut billions of dollars from the budget. Proposed cuts include cutting public broadcasting and withdrawing funding from abortion rights groups. But the problem here is: Trump still wants to cut taxes even more. His new plan includes cutting corporate taxes to 15%. Critics have sharpened their knives. They say that will deepen the deficit even further. Jessica Fulton from the Center for Political and Economic Research said that these cuts would benefit the rich and plunge the country into deeper financial trouble. Even some Republican lawmakers are concerned, calling the plan reckless as the deficit has tripled. High interest rates are also creating barriers. The 10-year Treasury bond yield, an important benchmark for borrowing, has risen from 0.6% in 2020 to 4.4% recently. This means that the cost of government borrowing is soaring. The same applies to ordinary Americans. However, the authorities have not yet run out of ideas. A controversial plan involving a refusal to spend the money has been approved by Congress. Another proposal aims to cut funding for energy and environmental projects tied to the Inflation Reduction Act. Both ideas could face legal challenges, but desperate times require desperate measures. Debt spiral threatens long-term growth The pandemic has made everything worse. US debt has surged by 16 trillion dollars during the COVID-19 period, an unprecedented increase. In the past year, the debt has increased by 6.3 billion dollars per day. That's over 262 million dollars every hour. Think about that. Debt is not just a domestic issue. It is affecting the role of the United States in the international arena. Investors are beginning to worry about the stability of the dollar. If confidence in the US economy weakens, it will certainly impact the global market, causing chaos everywhere. From stocks to cryptocurrencies, everything will shake. And the global economy itself may collapse.