The nation’s debt, currently over $34 trillion, is rampantly growing as U.S. lawmakers have been unable to agree to long-term budget reforms that could tame it.
Officials from several institutions warn a tipping point is near and it will only get worse if it snowballs into a crisis. The national debt is currently almost the same size as the entire U.S. economy, which is roughly $27.3 trillion, according to a Council on Foreign Relations report, and is on track to double within the next thirty years.
In the last few months, officials at several institutions including the International Monetary Fund, Congressional Budget Office and banking giant Goldman Sachs Group have cautioned that the country’s skyrocketing debt is a big problem–literally bigger than ever before–and some fear similar market chaos that derailed former UK Prime Minister Liz Truss’ economy when she was in office in 2022.
The UK economic fiasco under Truss was due to a radical economic proposal of tax cuts and borrowing–which triggered market turmoil in Britain, causing the value of the pound to plummet and Truss to announce her resignation after just six weeks as Prime Minister.
In the U.S., IMF officials have warned that public spending and borrowing will “overheat” the country’s economy, while pushing up funding costs in the rest of the world.
Phillip Swagel, the director of the Congressional Budget Office, said the country’s debt is on an “unprecedented” trajectory in an interview with the Financial Times, and could risk a Truss-style economic crisis.
John Waldron, the president and COO of Goldman Sachs, expressed a similar concern at Semafor’s World Economic Summit on April 18.
Source: Fortune
