{"id":335,"date":"2026-05-29T10:09:44","date_gmt":"2026-05-29T10:09:44","guid":{"rendered":"https:\/\/interstatelogisticshubs.com\/?p=335"},"modified":"2026-05-29T10:09:44","modified_gmt":"2026-05-29T10:09:44","slug":"national-debt-reaches-a-scary-milestone","status":"publish","type":"post","link":"https:\/\/interstatelogisticshubs.com\/?p=335","title":{"rendered":"National Debt Reaches a Scary Milestone"},"content":{"rendered":"
\n

The\u00a0U.S. national debt\u00a0has crossed an ominous threshold, rising above 100 percent of national gross domestic product, or GDP. This is the first time since World War II that debt has been so high a percentage of national economic output.<\/p>

Read more The Cyber Apocalypse Nobody\u2019s Ready For: Why Q-Day Changes Everything<\/a><\/p>\n

That is a big problem because the federal debt undermines the value of the U.S. dollar and diverts investment from the wealth-creating private sector. The rising debt and its pressure on the nation\u2019s economy will force the federal government and Federal Reserve, the latter led by newly confirmed chair Kevin Warsh, to make hard decisions they have put off for decades.<\/p>\n

Many among the public will suffer as a result, especially the elderly, who rely on Social Security and Medicare.<\/p>\n

GDP is the total amount of spending in the nation\u2019s economy. At the end of March, federal debt held by the public was $31.265 trillion, and GDP in 2025 was $31.216 trillion.<\/p>\n

The rise of debt-to-GDP is accelerating because the federal budget is structurally unsound. The government \u201cis spending $1.33 for every dollar it collects in revenue, and the budget deficit this year is projected at $1.9 trillion,\u201d\u00a0the Wall Street Journal<\/em>\u00a0reports.<\/p>\n

Over the past two decades, the annual federal budget deficit has expanded far beyond what was normal from 1950 to 2007, which was about 25-45 percent. The federal debt quadrupled from 1970 to 1990, tripled from 1990 to 2000, and has doubled in each decade throughout this century.<\/p>\n

Federal revenue has continued to increase. The problem is that\u00a0spending is rising much more rapidly,\u00a0pushing the annual budget deficit up to almost 6 percent of GDP, accelerating the increase in the national debt. As a result, the debt-rise trendline is\u00a0becoming much steeper.<\/p>\n

This is the first time the nation\u2019s debt-to-GDP ratio has been so high without a major crisis such as a war or pandemic. There is no excuse for the recent increases in the federal debt. The federal deficit\u00a0decreased by 63 percent between 2020 and 2022, erasing all the pandemic increase. Discretionary spending hikes have pushed the deficit up since then.<\/p>\n

The numbers show that the federal government has spent the period since 1974 borrowing enormous amounts of money to spend on vote-buying with ever-greater income-transfer payments.<\/p>\n

This politically motivated overspending has eroded the value of the U.S. dollar through inflation, which reached a crisis in 2021 through 2023 when the Congress and President Joe Biden expanded spending rapidly while greatly tightening federal regulation of the economy. Economic growth has slowed.<\/p>\n

As government deficit spending diminishes economic growth, it pushes the nation\u2019s economic output, the GDP, well below its potential, which further increases the deficit and debt as a percentage of GDP. The only thing that can stop such a fiscal whirlpool is a major cut in spending. That is as true for governments as it is for any household or business.<\/p>

Read more Never Let Politicians Decide What Is True<\/a><\/p>\n

To be sure, the debt-to-GDP ratio is not some sort of magic number. GDP measures economic activity, not wealth, and net worth is the real measure of the capacity to carry debt. The United States remains the world\u2019s wealthiest nation by far, holding 35 percent of the world\u2019s net worth. Other than China at 19 percent, no other country has even five\u00a0percent of global wealth.<\/p>\n

The U.S. federal debt amounts to 5 percent of the nation\u2019s total assets,\u00a0according to economist John Rutledge. Although that is far, far more debt than is either advisable or justifiable, it is a little less than half the average American household\u2019s debt, which Rutledge calculates at 10.2 percent. As Rutledge notes, \u201cthe future of our economy will be determined by the stability of our enormous balance sheet.\u201d<\/p>\n

That is true. Free people can create wealth by using limited natural resources and unlimited human ingenuity. The United States has an abundance of both.<\/p>\n

Government, by contrast, can only take from what the people build, and every government extraction or regulatory impediment reduces that output. Rutledge believes that we are \u201cabout due\u201d for a credit crisis, as do I. Americans, however, always find a way through these government-imposed predicaments as people readjust their priorities to realign with reality.<\/p>\n

The real crisis that lies ahead is not bankruptcy of the American people but an insolvent federal government.<\/p>\n

That is\u00a0good<\/em>\u00a0news. If the federal government loses its ability to borrow money ever-more frenetically as massive sovereign debt pushes up interest rates, the government\u2019s ability to borrow will collapse a few years from now, at most.<\/p>\n

The ensuing choice between repudiation of national debt (directly or through very high inflation) or huge spending cuts will disrupt the economy badly and diminish people\u2019s reliance on the national government.<\/p>\n

The American people, however, can and will survive and thrive, probably with a much smaller government on the other side of the commotion. That last part sounds beautiful.<\/p>\n

We could avert a fiscal crisis by cutting spending and regulation. We will not do so, however, because presidents and members of Congress cannot bear the idea of being held responsible for tens of millions of Americans\u2019 loss of freebies paid for by other taxpayers. No number of dire warnings and symbolic thresholds will change that.<\/p>\n

S.T. Karnick\u00a0is a senior fellow at The Heartland Institute and author of the\u00a0<\/em>Life, Liberty, Property\u00a0weekly e-newsletter<\/em>.<\/strong><\/span><\/p>

Read more Steyer vs. Becerra: California Screamin\u2019<\/a><\/p>\n

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