Debt Continues to Climb in the U.S.
The U.S. has now officially passed over $20.0 trillion in debt, the highest it’s ever had in its existence.
As a percentage of gross domestic product (GDP), the debt level has never been anywhere near this high with the exception of World War II.
The debt has risen as a result of a combination of factors that span backward for decades. Policies under Ronald Reagan, for instance, helped contribute to the growing debt as the country moved forward.
In more recent years, several key factors have contributed to America’s ballooning spending problem.
One of the biggest contributors was the Great Recession, which caused billions upon billions of dollars to be accumulated as debt. The government both had to respond to lower tax revenue as a result of Americans losing money, and also had to institute stimulus packages in order to spark the economy, again causing billions to be borrowed.
The wars in Afghanistan and Iraq have also taken their toll, with the two of them accounting for roughly $2.0 trillion on their own when you factor in interest.
And George W. Bush-era tax cuts that were continued under Barack Obama served to cut revenue to the U.S., making that debt all the more unbearable as the U.S. was less able to pay it off, while also running higher deficits due to the lack of revenue from taxpayers.
The debt is also showing no signs of slowing down. Between an aging Baby Boomer population in need of medical care, a lower birth rate and therefore smaller base of taxpayers, and increased healthcare costs, the U.S. seems poised to have debt on the books for many years going forward. The Congressional Budget Office estimated that if current laws remain the same, debt held by the public would climb to about 150% of the total economy by 2047, almost double what we have now with 77%.
President Donald Trump suspended the debt ceiling, allowing more spending to go through, and has proposed mainly tax breaks and increases in spending that will likely increase debt. One study by the Tax Policy Center estimated that a Trump tax plan would increase debt by about $7.2 trillion over the course of a decade.
“An Analysis of Donald Trump’s Revised Tax Plan,” Tax Policy Center, October 18, 2017.