The U.S. Gross National Debt has now topped a record of $38 trillion, with no signs of slowing down due to economic and political uncertainty.
This marks the fastest accumulation of debt since the COVID-19 pandemic, when this past August, the debt reached $37 trillion.
“Relative to one year ago, total gross national debt is $2.17 trillion higher; relative to five years ago, it is $10.83 trillion higher,” according to the Joint Economic Committee. That reflects a change of nearly $70,000 per second in the last year.
The U.S. public debt is created when federal spending exceeds government revenue, resulting in a budget deficit. To bridge this gap, the government issues marketable securities such as Treasury Bonds, Bills, Notes, Floating Rate Notes and Treasury Inflation Protected Securities to borrow money.
Major spending categories include Income Security, Social Security, Healthcare, National Defense and Medicare.
During the government shut- down, operations have stopped while some workers continue without pay. This deferred payment worsens the debt.
The U.S. government shut- down began on Oct. 1, following a Democratic disagreement over extending funding for government services beyond the federal budget’s expiration date.
Republicans voted to extend funding through the end of November.
But Democrats opposed the bill, drawing a line at programs created under prior Democratic leadership, such as the Affordable Care Act and Medicaid.
Democrats wanted the bill to include an extension to expiring tax credits that would make health insurance more affordable for millions of Americans who were affected by President Donald Trump’s cuts to Medicaid, a program used by millions of elderly, disabled and low-income individuals. They also urged the administration to stop spending cuts to government-run health agencies.
Without the extension, health insurance premiums would rise and millions could be at risk of losing coverage.
Currently, Republicans control both chambers in Congress. In the Senate, however, Democrats can negotiate voting power by refusing to cast votes.
During this shutdown, about 730,000 federal workers are working with pay, while 670,000 were furloughed, according to the Bipartisan Policy Center.
If the shutdown extends through Thanksgiving, unpaid federal wages alone would amount to $21 billion, costing $400 million per day according to the Congressional Budget Office estimates.
The U.S. Treasury Debt Clock estimates the total amount of debt since the first day of the shutdown totals to about $1 trillion, driven by lost economic output from federal data reporting, delayed tax revenue and mandatory spending continuing for essential services like Social Security and interest payments.
The Debt-to-GDP ratio sits at 120.65%, signaling a growing challenge in repaying debt without raising taxes or cutting spending.
Once the shutdown ends, restarting agency operations will also come at a cost.
The last government shutdown was under the Trump administration. The shutdown lasted 35 days, the longest in history and cost the U.S. economy $11 billion according to the CBO.
Ballooning federal debt will pressure inflation and interest rates to rise in an uncertain economy, which may cause investor confidence to weaken.
Credit rating agency Moody’s recently downgraded the U.S. credit rating, which has historically remained an AAA to AA1, with echoing concerns expressed by Standard & Poor and Fitch Ratings.
The effects of this deficit are already visible in local infrastructure projects.
In NYC, the Hudson River Tunnel project and a major subway project, together valued at $18 billion in federal funds, were paused on Oct. 1.
There are currently no concrete plans to resolve the shutdown.
It is on track to become the longest government shutdown in U.S. history.
