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CNN Business
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America’s national debt rose north of $31 trillion for the first time, coinciding with a period of historically high inflation, rising interest rates and growing economic uncertainty.
The total public debt of the country was closed $31.1 trillion on MondayAccording to data released by the Treasury Department on Tuesday.
The US government began borrowing to support the country’s economy during the Covid-19 pandemic. The deadly virus has upended lives, labor markets and supply chains. Outstanding debt has increased by nearly $8 trillion since the beginning of 2020. And there is increased by $1 trillion in just eight months.
The borrowing that took place during the Trump administration and early in the Biden administration came at a time when interest rates were low. Now, amid historically high inflation and a series of steep interest rate hikes as the Federal Reserve struggles to tame rising prices, borrowing costs are higher.
The Committee on a Responsible Fiscal Budget estimated last month that President Joe Biden’s policies could add $4.8 trillion to deficits between 2021 and 2031.
“Excessive borrowing will lead to continued inflationary pressures, pushing the national debt to a new record by 2030 and tripling federal interest payments over the next decade — or sooner if interest rates rise faster or more than expected.” CRFB wrote.
America’s debt level sounded in the last decade. When former President Barack Obama took office on January 20, 2009, the outstanding national debt was $10.6 trillion; $19.9 trillion when former President Donald Trump took office on January 20, 2017; $27.8 trillion when Biden takes office on January 20, 2021, Treasury Department data shows.
Another debt overrun could certainly signal a “very big problem” ahead; However, the high level of inflation in the near term is the biggest concern, said Alex Pelle, US economist at Mizuho Securities.
“Any debt problem is really a potential problem — I wouldn’t even say a specific problem — but a potential problem that will last five to 10 years,” he said. “One of the advantages of being the world’s reserve currency is that everyone wants to buy your debt cheaply.”
CNN’s Zachary B. Wolf contributed to this report.
