What happened
The United States' national debt has surpassed $40 trillion, with the government spending approximately $7.4 trillion against $5.6 trillion in revenue. This results in a daily interest expenditure of around $3 billion. Despite the significant concern among voters, with 66% of Democrats and 62% of Republicans considering the federal deficit a major issue, few candidates are addressing the topic in the upcoming midterm elections.
The Congressional Budget Office projects a $2.1 trillion deficit for the current fiscal year, about 6% of the country's GDP. The debt has grown substantially since 2001, when it stood at $5.7 trillion, and now equals around 125% of GDP. This has led to increased interest costs, which are expected to consume nearly 19% of federal revenue this year and potentially 25% within a decade.
Experts warn that the rising interest costs will not only affect the government but also households, as mortgage rates track the 10-year Treasury yield. Some have suggested that a credible fiscal package would help alleviate the issue, while others propose reforms such as removing the debt limit as a negotiating tool or implementing enforceable deficit targets.
As the midterm elections approach, voters are being encouraged to demand a comprehensive fiscal plan from candidates, including a clear deficit target, consideration of interest costs, and a commitment to a balanced budget. With the statutory debt limit of $41.1 trillion expected to be reached by February or March 2027, the need for a pragmatic solution is becoming increasingly urgent.
