For the first time in American history, the national debt has risen above the $30 trillion mark.
The Treasury Department confirmed the new record on Tuesday, as recent explosions in the debt level are primarily attributed to the colossal spending approved to address the COVID-19 pandemic. The debt has ballooned since the beginning of the pandemic by more than $7 trillion. By December of last year, more than 80% of all US dollars in existence had been generated since the pandemic began.
The announcement of the new debt record comes as the Federal Reserve is expected to raise interest rates throughout 2021, beginning as early as March. The Fed is finally being forced to pay attention to the surging inflation that the Biden Administration dismissed for many months as merely “transitional.” Interest rate increases required to contain inflation will dramatically increase the amount of money the government needs to raise to pay interest on the national debt.
The Tax Policy Center reports that the 2017 Tax Cuts and Jobs Act passed during the Trump Administration will add up to $2 trillion to the national debt by 2025.
The national debt is almost $8 trillion owed to foreign bondholders. China and Japan are the most prominent creditor nations holding US debt, holding more than $1 trillion in sovereign US debt obligations.
The $30 trillion national debt number doesn’t tell the entire story of the government debt faced by American taxpayers. State and local government debts add another $3.2 trillion, bringing the total debt to GDP ratio to a staggering 142 percent. Things get much worse when unfunded liabilities are also considered. These are promises that have been made for future entitlement payments, including Social Security and Medicare. Those obligations are estimated to be at least $160 trillion, bringing the total liabilities to nearly $200 trillion.
Given the apparent issues that the government will face raising the money needed to meet only the obligations already undertaken, the nation is staring down the barrel of continuing and unpredictable inflation.