National debt tops $30 trillion milestone

WASHINGTON » America's gross national debt topped $30 trillion for the first time Tuesday, an ominous fiscal milestone that underscores the fragile nature of the country's longterm economic health as it grapples with soaring prices and the prospect of higher interest rates.

The breach of that threshold, which was revealed in new Treasury Department figures, arrived years earlier than previously projected as a result of trillions in federal spending that the United States has deployed to combat the pandemic. That $5 trillion, which funded expanded jobless benefits, financial support for small businesses and stimulus payments, was financed with borrowed money. The borrowing binge, which many economists viewed as necessary to help the United States recover from the pandemic, has left the nation with a debt burden so large that the government would need to spend an amount larger than America's entire annual economy in order to pay it off.

Some economists contend that the nation's large debt load is not unhealthy given that the economy is growing, interest rates are low and investors are still willing to buy U.S. Treasury securities, which gives them safe assets to help manage their financial risk. Those securities allow the government to borrow money relatively cheaply and use it to invest in the economy.

For years, presidents have promised to limit federal borrowing and bring down the nation's budget deficit, which is the gap between what the nation spends and what it takes in. Under President Bill Clinton, the United States actually ran a budget surplus between 1998 and 2001. But taming deficits had fallen out of fashion in recent years, including during the Trump administration, when lawmakers blew through budget caps and borrowed money to fund tax cuts and other federal spending.

Now, deficit concerns have resurfaced, helping to stall negotiations over President Joe Biden's $2 trillion safety net and climate spending proposal. Sen. Joe Manchin, D-W.Va., whose vote is key to passing Biden's package, cited “staggering debt” as a reason he could not support the legislation.

The lingering pandemic has slowed the momentum of the economic recovery, fueling inflation rates unseen since the early 1980s and raising the prospect of higher interest rates.

“Hitting the $30 trillion mark is clearly an important milestone in our dangerous fiscal trajectory,” said Michael A. Peterson, CEO of the Peter G. Peterson Foundation, which promotes deficit reduction.