The United States national debt has surpassed $39 trillion and is currently growing faster than the economy. And now, President Donald Trump is asking for a 40 percent increase in defense spending in his proposed budget for the 2027 fiscal year. This brings defense spending up to $1.5 trillion and further adds to the country’s mounting debt problem. With the debt continuing to rise to historic levels and lawmakers taking little action to address it, the question arises: Should we even care about the debt? The answer’s complicated.
Understanding the debt
As defined by the U.S. Treasury, the national debt is the amount of money the federal government has borrowed to cover the outstanding balance of expenses incurred over time. Each year, Congress sets a budget for the fiscal year, which allocates how the government spends its money. Revenue is collected by taxes and held by the Federal Reserve, and when spending exceeds revenue for a given year, the government enters a budget deficit. For context, 2001, the last budget overseen by Bill Clinton’s presidency, was the last time the U.S. had a balanced budget, achieving surpluses from 1998 to 2001. He was the last president to do that since Lyndon B. Johnson in 1969.
When the government is in a deficit, the Treasury borrows money by selling bonds, bills, notes and other securities to investors, which can be individuals, banks and foreign governments. These lenders get their money back through the Treasury either by repaying it with interest on taxes or by reissuing new debt and repeating the cycle. This cycle is referred to as “rolling over” debt, as the U.S. pays off its debt by borrowing more money that it will eventually have to repay. According to the Treasury, 17 percent of total federal spending ($520 billion) in 2026 will be used to maintain the debt.
Ultimately, the U.S. spends well above what it taxes, leading to a deficit that is covered by borrowing money, creating debt. Then, that borrowed money is repaid with more borrowing, leading to a constant accumulation of debt.
How it affects us
There are numerous ways the debt affects citizens and the U.S. government. The primary harm to citizens is higher interest rates, which means it costs more to borrow money, meaning people will be less able to take out loans to buy houses, cars and other essentials that drive the economy. Furthermore, it is more expensive for businesses to borrow money, leaving them with less to pay workers, which is a leading reason why inflation has outpaced wage increases. According to the U.S. Government Accountability Office, high interest rates can also lead to higher costs of goods and services as companies have less money to invest in efficient production. The government also pays interest on its loans, with the Congressional Budget Office projecting interest payments totaling $16.2 trillion over the next decade.
So, despite economic growth, federal borrowing is not sustainable because the debt is growing faster than the economy. And because deficits continue to grow each year, so does the amount the government owes, meaning interest payments grow as well, leaving Americans with higher costs.
Why we should care
Rising debt puts citizens in a difficult financial situation and limits the services the government can provide. Rising debt and interest rates make it incredibly difficult for the average American to take on mortgages, car loans or student loans. Additionally, businesses are crowded out of investing, which will lead to price hikes, shortages, wage stagnation and slowing of the economy. With the government also taking on the burden of paying interest, the debt continues to grow exponentially, even without borrowing more. This, combined with the government’s immense borrowing costs, has led to the debt being as astronomical as it is today. That substantially caps how much the government can spend on services, unless it borrows more money to pay for them, which is rolling debt over (not a solution to the problem). And because our debt is currently unsustainable (it is growing faster than Gross Domestic Product), the U.S. will eventually run out of funds for safety-net programs like Social Security and Medicare as long as the debt ceiling remains in place.
No, having debt itself is not detrimental to the country, but it is because of the rate at which it is growing. One solution would be to increase revenue (taxes) to better justify government spending, but that also can lower economic output. Another solution is to better balance the budget (like Clinton and LBJ did), which is the optimal choice, but would require significant bipartisan support to appropriate funds more efficiently and reduce spending in certain areas, which is where democrats and republicans disagree.
With many lawmakers and candidates focused on the “affordability” crisis, debt is the right issue to take on before it is too late.
