Written by Lexx Thornton
In the midst of a federal government shutdown, the U.S. government’s gross national debt surpassed $38 trillion on Wednesday — a record high that underscores how fast America’s debt is piling up.Â
What’s particularly alarming is that this is the fastest the country has ever added a trillion dollars in debt outside of the COVID-19 era — the U.S. crossed $37 trillion just two months ago in August.Â
According to the latest report from the U.S. Department of the Treasury, which tracks the nation’s daily fiscal status, this milestone marks a sharp acceleration in borrowing.Â
Economist Kent Smetters of the Penn Wharton Budget Model (and a former Treasury official) warns that as the debt grows, it could ultimately drive up inflation and erode Americans’ purchasing power. Â
The Government Accountability Office (GAO) highlights several downstream effects: higher borrowing costs (for things like mortgages and auto loans), reduced business investment leading to lower wages, and more expensive goods and services.Â
Smetters explained:Â
“I think a lot of people want to know that their kids and grandkids are going to be in good, decent shape in the future — that they will be able to afford a house. That additional inflation compounds … and erodes consumers’ purchasing power … making it less possible for future generations to achieve home ownership goals.”Â
Meanwhile, the Peter G. Peterson Foundation’s chair and CEO, Michael Peterson, said in a statement:Â
“Reaching $38 trillion in debt during a government shutdown is the latest troubling sign that lawmakers are not meeting their basic fiscal duties … With increasing debt, you get higher interest costs — the fastest growing part of the budget. We spent $4 trillion on interest over the last decade, but will spend $14 trillion in the next ten years. Interest costs crowd out important public and private investments … harming the economy for every American.”Â
To put the pace into perspective: the U.S. crossed the $34 trillion mark in January 2024, $35 trillion in July 2024, and $36 trillion in November 2024.
