TLDR
- US national debt has reached $36 trillion by November 21, 2024
- Trump appointed Elon Musk and Vivek Ramaswamy to lead the new Department of Government Efficiency (DOGE).
- Debt servicing costs are expected to exceed $1 trillion next year, surpassing defense spending
- Musk proposes to potentially cut $2 trillion in government spending
- Higher debt levels and interest rates could complicate Trump’s planned tax cut extensions
The United States has reached a new financial milestone as the national debt exceeds $36 trillionaccording to recent Treasury Department data. This development comes as President-elect Donald Trump prepares to implement new measures to reduce government spending and tackle the growing debt burden.
The debt milestone was reached on November 21, marking an increase of over $2 trillion in 2024 alone. Under the Biden administration, the national debt has grown by more than $8 trillion in just three years, rising from $28 trillion to its current level of $36 trillion.
In response to these mounting fiscal challenges, Trump announced the creation of a new one Department of Government Efficiency (DOGE), led by Tesla CEO Elon Musk and businessman Vivek Ramaswamy. The department’s primary focus will be on reducing government spending, cutting regulations and implementing cost-saving initiatives across federal agencies.
Musk expressed his concerns about the debt situation on the social media platform X, described the current level of debt as “frightening.” He noted that the national debt is more than $106,000 per American citizen, which highlights the scale of the financial burden.
Terrifying tbh https://t.co/ogmrt9Wy6k
— Elon Musk (@elonmusk) November 25, 2024
The newly appointed DOGE co-heads outlined their approach in a Wall Street Journal article, saying they would work with “a lean team of small government crusaders” to pursue three main types of reform: regulatory withdrawal, administrative reductions and cost savings.
At a New York rally, Musk suggested the potential for $2 trillion in spending cuts, representing about 30 percent of the federal government’s total spending of $6.75 trillion last fiscal year. “At the end of the day, all government spending is taxes,” Musk said, emphasizing the impact on American taxpayers.
The rising debt levels have led to increased debt service costs, which are expected to exceed $1 trillion next year. This amount would exceed the federal government’s defense spending, which reflects the growing financial burden of the debt.
Interest rates have played a crucial role in the increased cost of debt service. The yield on 10-year Treasuries rose to 4.4%, up significantly from the 0.6% in April 2020 during the pandemic. This increase in borrowing costs has implications for both government spending and consumer finances.
The United States currently has the largest national debt in the world, according to the International Monetary Fund. As a percentage of GDP, American debt stands at 121%, although this ratio remains lower than countries such as Sudan (344%), Japan (251%) and Singapore (175%).
The Congressional Budget Office projects that the federal debt will reach $56.8 trillion by 2034, raising concerns about long-term fiscal sustainability. The House Budget Committee attributed this projection to “unsustainable federal and executive spending.”
The Trump transition team has addressed potential conflicts of interest, saying DOGE and its participants comply with all legal guidelines. David E. Lewis, a political science professor at Vanderbilt University, noted that while government inefficiency deserves scrutiny, careful attention must be paid to potential conflicts of interest involving the appointed leader.
The debt situation may affect Trump’s plans to extend the 2017 tax cuts, which expire next year. Some Republican lawmakers are looking to scale back those ambitions because of deficit concerns.
The majority of government debt is held by the public, with Japan and China as major foreign holders. The increased debt servicing costs are already affecting government spending capabilities, with about one in five federal dollars now going toward debt service rather than investing in future economic growth.
Brian Riedl, a senior fellow at the Manhattan Institute, expressed concern about renewing previous tax cuts given current deficit levels.
“Clearly, it’s irresponsible to roll back the same tax cuts after the deficit has tripled,” he said.
Some analysts have proposed several solutions, including refusing to spend congressionally approved funds, although this approach could face legal challenges. Russell Vought, Trump’s pick for White House budget director, has proposed over $11 trillion in spending cuts over 10 years to potentially generate a surplus.
The Treasury Department continues to monitor the debt situation daily through its “Debt to the Penny” dataset, which provides regular updates on this crucial economic indicator.
