The growing debt mountain follows the US like a dark cloud
Andreas Cervenka
This is a commentary text. . Analysis and positions are those of the writer.
Published 21.03
WASHINGTON D.C.
For the first time in 30 years, the US carried out a bailout to keep its own interest rate down.
At the same time, the country's debt mountain is growing ever higher.
The question is not if, but when it will become a problem.
Anyone walking around Washington D.C. has a hard time avoiding the state of the US government's finances.
In a bus shelter, not far from the White House and the Treasury Department, there is a calculator where you can see how much the US government owes in real time.
When I pass by, the total is up to 39,843,807,319,785 dollars.
There are so many numbers that it is easy to lose balance.
That's almost $40 trillion. At the current rate, it will only be weeks before the debt passes this ominous milestone.
The amount corresponds to over 120 percent of US GDP, and the debt has thus surpassed the previous record levels just after World War II.
If the money were to be counted up in hundred-dollar bills and put in a pile, the pile would be 40,000 kilometers high. If it were laid out on the ground, it would reach all the way around the world.
It's just a mental game. There is no such thing as that much physical money. The sum of all outstanding bills and coins in the United States is only $2.5 trillion.
$40,000 billion corresponds to around 1.1 million kronor per American citizen. In Sweden, our national debt is less than 120,000 kronor per person.
No matter how you twist and turn it: a lot of money.
The campaign on the national debt is funded by the Peter G Peterson Foundation, an organization founded in 2008 to create public opinion about the increasingly hollow US government finances.
At that time, the debt was $10,000 billion, a quarter of today's level.
But the debate about the US government's debt is as old as the United States.
In the1790s, the first US Treasury Secretary Alexander Hamilton warned of the dangers of excessive debt. Spending with borrowed money was something that, according to him, was "perhaps the natural disease of all governments, and it is not easy to imagine anything that would lead to great and violent revolutions with greater probability than this."
At the same time, Alexander Hamilton helped establish the dollar as the national currency of the United States and created the market for US government securities. This laid the foundation for the borrowing machine that is still the United States' main economic weapon.
Warning that the state is living beyond its means has been a political message that has been very popular in the United States for periods before falling away.
When Trump was first elected in 2016, he promised to pay off the national debt. Photo: Jacquelyn Martin/AP
When Donald Trump first tried to get elected, he promised to “pay off the debt” in eight years. It was then $19 trillion. That didn’t happen. Instead, the national debt rose by almost $8 trillion during his first term, due to tax cuts but above all the pandemic.
Even in the 2024 election campaign, Donald Trump talked about reducing the debt mountain, including through tariffs and Elon Musk’s “savings department” DOGE. This did not work.
Since Trump was sworn in for the second time, the US debt has risen by $3.7 trillion, or just over 60 billion kronor a day.
In recent years, the Iran war has devoured a lot of money, and revenue from the tariffs that have been imposed must now be partially repaid.
The deficits are predicted to continue – according to the Congressional Budget Office (CBO), the debt will rise to $43.3 trillion when Trump leaves the White House.
A well-known venture capitalist has called Trump the worst spender of all US presidents.
However, blaming the US's chronic deficit on Trump is unfair. Rather, it has become a state of nature in Washington during the 2000s, regardless of the president. Even under Barack Obama and Joe Biden, the national debt grew dramatically.
And the CBO predicts that it will continue to grow rapidly both in absolute terms and as a share of the US economy over the next ten years.
Experts have been warning for a long time, as have bureaucrats. The Government Accountability Office is calling for "urgent action" and points out the state's "unsustainable finances" as an economic, security policy and social threat.
Just in time for the upcoming midterm elections, government finances have made a bit of a comeback in the political conversation.
Mark Sanford of South Carolina, who is running to replace the late Lindsey Graham in the Senate, launched his campaign with a warning that the United States is “approaching a fiscal tipping point.”
Is he right? .
Despite warnings, the economy has continued to do well in recent years, with GDP growth of 2.8 percent in 2024 and 2.1 percent in 2025.
A major driver has been the AI boom and the construction of all the data centers
But the economy is also stimulated by deficits.
In the last twelve months alone through July, the US government has fallen by $1.9 trillion, or over 6 percent of GDP.
That can be compared to Barack Obama's large support package during the financial crisis, the "American Recovery and Reinvestment Act" in 2009, which was $787 billion, or between 6 and 7 percent of GDP.
Or Joe Biden's "American Rescue Plan" during the pandemic, which was $1.9 trillion.
The difference was that the economy was almost in free fall at the time.
Now the additions are happening at the same time as the economy is struggling. The question, of course, is whether the US economic growth is partly an illusion, driven by government stimulus doping?
Another issue that the rapidly increasing debt points to is how much government securities the US government has to sell each year. The government does not only need to borrow a couple of thousand billion dollars annually to cover the current deficits. A large part of the existing debt is maturing and must be replaced with new loans. In total, the borrowing requirement amounts to an estimated $12,000 billion each year. The slightest sign that investors are getting cold feet would have major consequences.
Financing is also becoming increasingly expensive. Concerns that inflation is not under control in the US and that the Federal Reserve will raise interest rates have caused market interest rates to rise recently.
The interest rate on 10-year US government bonds is currently just over 4.7 percent and the 30-year is 5.25 percent. These are the highest levels since 2007, before the financial crisis.
The difference between then and now is that the debt is four times larger. In July, the government's interest rate rose by 22 percent compared to last year, and interest on the government debt is already eating up more money than the US defense budget. Higher interest costs increase deficits and mean that the government has to borrow even more. And so on.
It is not only the government budget that is affected by rising interest rates.
The stock market is also usually negatively affected when borrowing costs increase for companies at the same time as it becomes more attractive to invest money in safe-interest securities. So far, however, the US stock markets have held out.
Judging by how US Treasury Secretary Scott Bessent has acted recently, rising interest rates have caused a lot of concern.
The US recently carried out a rescue operation by supporting the purchase of the Japanese currency, the yen, which has weakened significantly. This is the first time in almost 30 years that the US has done something like this.
Officially, it was to help Japan and other countries in Asia whose currencies are at risk of being dragged down, but the real motive is probably to help the United States.
Japan is the United States' largest foreign lender, with a holding of government bonds worth over $1,100 billion. The alternative to the US's emergency was for Japan to start selling these papers to finance support purchases of its own currency.
That would risk pushing up US interest rates even further.
The market interprets this as the US now being prepared to do whatever it takes to keep the interest rate on its national debt down, writes Bloomberg.
Nervously worse, in other words.
Donald Trump has spent his second term in office declaring that it is the outside world that depends on the US and not the other way around, not least militarily.
His own Treasury Secretary has reminded everyone of the US's most vulnerable point.
