National debt nears $40 trillion: How we got here and why it matters

Amna Nawaz:

Well, the U.S. national debt is expected to hit a record high as soon as this week, crossing a major threshold of $40 trillion.

Our congressional correspondent, Lisa Desjardins, joins us now to explain why that milestone is a warning sign for many economists.

Lisa, remind us what this all means and why it all matters.

Lisa Desjardins:

Right.

The U.S. national debt is important to us because it helps drive the engine of our government, but it is also a cornerstone of the world economy. Those sometimes can be good things. But let me explain why this level is now a new red flag.

Let's take a look and define terms. We are fast approaching $40 trillion in gross or total national debt. One major problem is that interest alone now costs more than $1.2 trillion a year for U.S. taxpayers. That's according to the Federal Reserve.

So we now spend more on interest, Amna, than we do on national defense, and basically more than almost anything else the government does. Rising debt also adds inflationary pressure to the economy.

We spoke with Carolyn Bourdeaux of The Concord Coalition, and she explained the concern if this red ink line keeps rising.

Carolyn Bourdeaux, The Concord Coalition:

Eventually, we will hit some sort of very serious fiscally induced economic crisis, which means that massive debt we're carrying, we will keep adding to it, and eventually it will cause a very serious economic crisis, and that can take many different forms.

Often, it takes the form of hyperinflation, high interest rates, really, really serious problems that will be very, very difficult for us to get out of.

Lisa Desjardins:

That future is not here yet, so why worry about it so much? Because neither Congress nor the White House is really addressing the core of this problem.

Amna Nawaz:

Obviously, all of this has been a long time in the making, Lisa. Remind us how we got here in the first place.

Lisa Desjardins:

Well, part of it have been specific economic crises, but another part has been very distinct crisis of leadership. If you look at the debt for the past 50 years here, you can see where it rocketed up in those two places.

One of those was 2009 with the recession, another 2020 with COVID. But you can also see that, even as the government flooded the zone to try and rescue the economy there here in recent years, you can see it has risen outside of those economic shocks. And both Republicans and Democrats, we see our two most recent presidents there, have seen the debt rise sharply under their watch.

Now, as for Congress, it has repeatedly solved problems -- I have sat here and talked about it -- by just spending more money. And Republicans have continued to cut taxes. All of that sounds great, except we don't have the money to do those things, really, when you look at our debt line.

So what's happening right now is a lack of leadership and, honestly, not just financial sobriety, but honesty about the problem.

Amna Nawaz:

And $40 trillion is such a huge amount. It is almost incomprehensible. How do we begin to get our heads around it?

Lisa Desjardins:

Right. We thought about this.

First, I just want folks to look at the number. Let's look at it. That's 40 with 12 zeros after it. That's what $40 trillion looks like. But what does that mean? It's almost impossible. One way you can think of it, is if you stacked up $1 bills, we hear this a lot, it would actually go all the way around the sun if it was $40 trillion.

Another thing that might not make much sense -- so we tried to come up with a more tangible way of expressing this. Let's talk about houses in America. Right now, the average single-family home costs about $400,000. And if you do the simple math here, 100 homes would be 40 million -- I'm sorry, would be $40 million.

But then let's zoom out to all of America. That's where you hit $40 trillion. That is more than the worth of every single family home in this country. We have about roughly 90 million single-family homes. So if you want to know what 40 trillion is, just look at the houses around you. It is the worth of every single family house in this country.

Amna Nawaz:

You mentioned the lack of leadership on this. Is anyone in Congress talking about how to tackle this?

Lisa Desjardins:

There are some, but, by and large, they just talk about their own slice of it, and they're unwilling to compromise over the tough things that they need to do to get us here.

One example is the Freedom Caucus in the house. They have been pushing for tighter budgets for years, but they actually did not get the kind of spending cuts that they campaigned on. And also, in truth, they're not willing to give on taxes and revenues. They want revenue cuts.

There's a big debate over what tax cuts do. Senator Rand Paul is an example of a senator as someone who votes against spending cuts, spending bills repeatedly over the national debt, but very few members of Congress actually do. And no one is talking about the big picture like Social Security reform, Medicare.

What's more too, the biggest voices here are leaving Congress this session. That's Republican Congressman Dave Schweikert of Arizona and also Democratic Congressman John Larson of Connecticut. He -- they spend a lot of time talking about Social Security.

Carolyn Bourdeaux points out that one of the issues here is that not just we have a problem now, but if lawmakers don't deal with it soon, they're going to have to take more and more drastic measures. And we're talking about significant spending cuts, but also potential significant tax increases to actually deal with it.

And right now we just don't see anyone talking about it. One more problem, we're at $40 trillion, but, Amna, we're now just a few years away from $50 trillion in national debt as well.

Amna Nawaz:

It's another staggering figure.

Lisa Desjardins, thank you very much.

Lisa Desjardins:

You're welcome.