The US national debt has exceeded $30 trillion for the first time due to massive federal borrowing during the coronavirus pandemic.
According to Treasury Department data published on Tuesday, total outstanding national debt (public and intragovernmental) reached $30.01 trillion on January 31. The debt threshold was breached several years earlier than previously projected, the New York Times reported.
The COVID-19 pandemic and the resulting lockdown has brought upon a massive borrowing binge. In late January 2020, US national debt was $23 trillion.
To cushion the economic blow from the crisis, the US Congress under the Trump and Biden administrations spent trilllions of dollars on subsidies for small businesses, the unemployed, families with children, renters, and others. The relief packages included expanded children tax credit, increased unemployment benefits and the Paycheck Protection Program for businesses.
US GDP surged amid falling COVID-19 cases in the first half of 2021, growing by 6.3% in Q1 2021 and 6.7% in Q2 2021. Economic growth slowed down to 2.3% in the third quarter due to the spread of the Omicron strain as well as soaring inflation, which reached 6.8% in December 2021 - the highest level since 1982. Global supply chain disruptions also put pressure on the US economy.
The Federal Reserve announced it would increase the key interest rate to tackle the highest inflation in 40 years.
The Treasury Department declined to comment on the debt milestone. "It's important to evaluate debt sustainability in the context of the interest-rate environment," US Secretary of the Treasury Janet Yellen noted during the World Economic Forum in January. She added that low interest rates made the debt burden "very manageable."
Some budget experts assume that the current US borrowing levels are unsustainable and could jeopardize the ability of the US government to respond to future economic crises or other shocks.
According to the Congressional Budget Office, the federal budget deficit reached $2.8 trillion or 12.4% of the GDP at the end of the fiscal year 2021 in September. Before the pandemic, the US deficit was equal to 4.7% of GDP.
Extremely high US debt levels have impaired president Biden's ability to pass his proposals for education, healthcare and climate-change programs.