When you read the number on a screen, it doesn’t actually feel like anything. $39 trillion. It appears in the corner of a cable news graphic or glides past in a news ticker, and most people look at it the same way they look at the weather in a city they don’t live in. However, the United States crossed a threshold this week that it hadn’t since Harry Truman was rationing steel—it now owes more than it produces in a year—quietly and without any fanfare.
It’s difficult to ignore how little attention that received. It was mentioned in a couple morning shows. An analysis was conducted by the Wall Street Journal. As is typically the case, by lunchtime the topic had shifted. The debt narrative seems to have gotten so well-known and consistently awful that the milestones are no longer significant. When a number is excessively large, it loses its meaning.
But it’s worth stopping to look at the structural components beneath this milestone. Due to the expenses of the recent conflict with Iran and the Pentagon’s increased drawdowns, the federal deficit is expected to reach approximately two trillion dollars this fiscal year, making it one of the biggest in American history. Washington currently spends more on interest payments alone than on national defense and Medicare put together. When people hear that information aloud, they are still taken aback. I’ve been hearing it for years, and it always surprises me.
If you’d like, you may watch it happen in real time. The US Debt Clock has been rising at a rate of several billion dollars every day, with the numbers nearly appearing to be a screensaver due to their blurring. The speed of it has an almost numbing quality, similar to how a leaky faucet eventually ceases to be audible. For years, economists have warned that this trajectory would eventually come to pass. It was never whether, but rather when.
Voters may not be paying attention, but bond markets are. Yields have gradually increased. At recent Treasury auctions, foreign purchasers, including China, Japan, and many European central banks, have become more picky, and traders in lower Manhattan have begun to use the term “demand-side” with the type of caution that normally precedes something unsettling. The Treasury continues to find purchasers. It always does. However, the cost continues to increase, which is reflected in everything from corporate credit to auto loans to mortgages.
The silence surrounding the congressional response has been nearly unbelievable. The House Budget Committee described the situation as a “flashing red light,” a term that falls halfway between press release and alarm bell. Both parties’ members have made some variation of the admission that they have been sleepwalking over a cliff, which would be startling if anyone appeared taken aback. No one does. Everyone in Washington is aware that there are still very few political incentives to actually solve this.
Here, history rhymes in awkward ways. The nation had just defeated two industrial superpowers the last time debt was this high in relation to the economy. It was a tale worth telling. This time, there isn’t really a narrative—just decades of cumulative decisions, tax reductions, entitlement increases, wars, and pandemic assistance piled on top of each other. No one in either party appears quite prepared to respond to the question of whether this milestone will be the turning point or just another number that goes by on the ticker.