The United States government has a long and proud history of issuing debt to finance its operations. Treasury debt outstanding is now at an all-time high and shows no signs of slowing down.
Debts are not an uncommon thing in most countries. Governments often incur debt to invest in infrastructure or other necessary projects.
The United States is no different, and it has been issuing debt since the Revolutionary War.
The amount of debt outstanding has increased significantly in recent years due to a variety of factors. The most significant factor is undoubtedly the Great Recession of 2008. During the year 2008, under the government of George W. Bush, the US Treasury Department had a debt of over $10 trillion.
2008 was not an isolated incident, as the debt has continued to grow over the years.
As of 2022, the debt is now over $30 trillion. This is an increase of over $20 trillion in just 14 years.
What are the reasons for the USA’s increasing debt
The USA found itself first time in debt during 1790 as the Revolutionary War came to an end and the country was left to finance the reconstruction by itself.
The primary reason for the increase in debt since then has been government spending on programs like Social Security, Medicare, and Medicaid.
1982 was the year when the US hit a trillion-dollar debt mark. The following two decades brought a series of wars and economic recessions that led to unfavorable conditions for the US economy.
The situation changed in 2008 when the Great Recession hit the country hard. This was followed by quantitative easing, a process of pumping money into the economy through bond-buying programs. The aim was to stabilize the economy and encourage lending and investment. However, this increased the national debt even further.
As of now, the major drivers of US debt are social welfare programs and military spending. Given the current state of affairs, it is unlikely that the debt situation will improve anytime soon.
What are the implications of having a large debt
The US government has been able to finance its operations despite the large debt through borrowing. However, this comes at a cost. The interest payments on the debt take up a significant portion of the budget, and this is likely to increase in the future as the debt grows larger.
This can crowd out other important expenditure items, such as infrastructure or education. In addition, large debt levels can make a country more vulnerable to economic shocks.
This is because lenders may become unwilling to finance the debt, and this can lead to a sharp increase in borrowing costs. This can put further strain on the government’s finances and potentially lead to a debt crisis.
Conclusion
Even being one of the developed countries, the USA has a long way to go to reduce its debt. The country’s debt has been increasing rapidly in recent years, and it is now at an all-time high. It touched the $30 trillion mark in 2022 and is expected to continue growing in the future.
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