Watch This | US's debt problem: What it means for the economy and the world?
The US national debt has long been a critical focal point for the global economy. According to the latest data, America's national debt has surpassed an astonishing US$30 trillion—a number that is both staggering and deeply consequential for the US and the world at large.
The rapid growth of US national debt has set off alarm bells among economists and policymakers alike. This surge in debt doesn't just represent numbers on a ledger—it translates into mounting interest payments. Imagine if your credit card debt kept ballooning every month without a corresponding increase in income. That's the precise predicament the US now faces.
As debt continues to soar, the US government's capacity to invest in crucial areas such as education, research, and infrastructure has been severely constrained.
As the Peter G. Peterson Foundation aptly warns, "A nation saddled with debt will have less to invest in its own future." Also, it isn't just an American problem—it's a global economic challenge.
The debt ceiling, set by Congress, acts as a legal limit on how much the federal government can borrow. Former President Donald Trump once controversially suggested that a US default might not be such a big deal.
However, this assertion starkly contrasts with the consensus among economists. Experts widely agree that a failure by the US government to meet its debt obligations would trigger economic chaos, destabilizing global financial markets.
If Congress fails to raise the debt ceiling, the US risks defaulting on its debt—a scenario that could unleash catastrophic consequences.
Social Security payments could be delayed or halted, leaving tens of millions of elderly and vulnerable individuals in financial distress. America's credit rating could be downgraded, increasing borrowing costs and impacting everything from mortgages to auto loans to credit card payments. Financial markets would likely become even more volatile, with stock markets suffering severe blows, retirement savings eroding, and consumer confidence plummeting—all of which could exacerbate an already fragile economy. Worse still, a default could push the US into a deep recession, slashing millions of jobs and driving unemployment rates sky-high.
Since 1917, Congress has repeatedly raised the debt ceiling to avoid default. Yet with the national debt climbing ever higher, the political and economic pressures on lawmakers have become increasingly intense. Whether Congress can continue to raise the debt ceiling in the future remains an open and pressing question.
The growth of America's national debt and the contentious debates over the debt ceiling are not merely domestic issues—they are pivotal to the stability of the global economy. As debt levels surge, the US faces an urgent need to strike a delicate balance between sustaining economic vitality and reining in its ballooning debt. The future of the global economy hinges, in no small part, on how America navigates this daunting challenge.
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