US national debt crossed $40 trillion, exceeding annual GDP, as interest payments approach $1 trillion, with economists warning of painful adjustments ahead. TOI correspondent from Washington: The United States’ national debt crossed $40 trillion on Tuesday, a number so large that even breaking it up with commas can scarcely make it comprehensible.
As in a 4 followed by 13 zeroes: $40,000,000,000,000! Number-crunching economists reached for various metrics to convey the scale of the crisis.
The US economy produces roughly $33 trillion worth of goods and services a year. So the debt is now bigger than the entire annual economic output (GDP) of the country.
Per American, that works out to roughly $118,000; for a family of four, about $472,000. Divvying it another way, the US is adding debt at a rate of roughly $90,000 every second.
To put that in perspective for readers in India, the $40 trillion debt America has racked up is roughly 10 times the size of India’s entire annual economy. In other words — although debt versus GDP is not an apples-to-apples comparison — the US owes roughly ten times the value of everything India produces in a year.
America’s debt mountain is therefore not merely bigger than India’s economy; it is about ten Indian economies stacked on top of one another. Economists also put the best possible spin by pointing out that the raw number itself is less important than debt relative to the size of the economy and the government’s ability to service it.
Just the US debt held by its public is roughly equal to annual GDP, and the Congressional Budget Office says that, under current law, the ratio could rise to 120% of GDP by 2036 and 175% by 2056. So how did the world’s richest country get here?
In the simplest terms, Washington has been spending more than it collects in taxes — year after year, administration after administration. Wars, tax cuts, the 2008 financial crisis, Covid stimulus, an ageing population and rising Social Security and Medicare costs have all added to the bill.
The pandemic was particularly spectacular: debt exploded as the government tried to prevent an economic catastrophe. But the extraordinary thing is that America has continued borrowing heavily even after the emergencies have passed.
Federal budget deficits are still running at levels normally associated with wars or recessions. The awkward question for Washington now is whether the borrowing eventually stops gently — or with a crash.
