Should We Worry About The National Debt?

January 27, 2025

The United States government spends an enormous amount of money to keep the country running year after year. It pays for everything from salaries for federal employees to tanks and fighter jets for the military and new roads and schools around the nation. For many decades, the government has doled out much more than it has taken in from Americans in taxes—borrowing the rest and adding to what’s known as the national debt. The debt currently sits at a record $36 trillion, and it continues to grow minute by minute.

Some economists and lawmakers say long-term debt will weaken our economy and lower future standards of living. Others say the debt represents the government’s investment in the country and that it’s necessary for growing the economy.

Should we worry about the national debt? A policy adviser and an economist face off on the question.

The economic future of the United States stands on shaky ground. The nation’s debt is on pace to double in the next 30 years to twice the size of our economy: The country would owe more than it has in wealth and resources.

The fastest-growing area of federal spending is interest. The government pays interest—more than $2 trillion a year—on the money it borrows. This will eventually force lawmakers to make difficult trade-offs that impact us all, particularly future generations. They may have to make drastic spending cuts in areas such as education, the environment, and national security, making us vulnerable to the next global challenge— a public health emergency or a threat from a geopolitical adversary.

When the government borrows money, lenders demand higher interest rates, and that raises rates across the economy. Your family may have to pay higher interest on a loan to buy a house or car. Higher interest rates can discourage businesses from borrowing money and investing, leaving workers to bear the losses through lower wages.

As the nation’s debt increases, so will the burden on the next generation.

Lawmakers must address the problem of debt. First, they could reform the U.S. tax code. The government doesn’t take in enough money through taxes to pay for its policies. So it should ensure that people and businesses pay their fair share and spend less time gaming the system for ways to avoid paying taxes.

Lawmakers could also make sure that programs many Americans depend on in their old age, such as Social Security and Medicare, aren’t a drain on the nation’s budget. People are living longer, and government will have to find more efficient ways of helping them pay for health care and the cost of living.

Where does this leave younger generations? The power rests with you. As you prepare to vote in future elections, listen for what candidates say about this important issue.

—BILL HOAGLAND
Senior Vice President, Bipartisan Policy Center

For decades, both Democrats and Republicans have used inflammatory words like “dangerous” and “unsustainable” to describe the national debt. But the truth is, the debt is not so scary.

Despite what it sounds like, the national debt is basically a scorecard that keeps track of how much money the federal government has put into the economy over the centuries. When the government spends on things like health care, infrastructure, education, and the military, it’s putting money into the hands of companies and workers in these industries, whose hiring and spending in turn helps other parts of the economy to the benefit of us all. By increasing the national debt, the government is essentially adding money to our pockets.

Those who worry about the national debt say it’ll put a burden on future generations. But the federal budget is nothing like a household budget: The government can’t run out of money because it issues the U.S. dollar. So it can always pay its bills, no matter how big they get. Occasionally, during political debates in Congress, lawmakers threaten not to pay, but they always pay in the end because a default would cause catastrophic damage to the global economy. For a currency-issuing government like the U.S., bankruptcy is impossible.

The real thing to worry about is whether the government is spending wisely.

Why do lawmakers want us to fear the debt? Sadly, the debt has become a convenient foil that both sides invoke to justify cuts to programs they just don’t like.

The real thing to worry about is whether the government is spending responsibly. It could exacerbate inflation by putting too much money into the economy. It could cause inequality to skyrocket by allowing too much wealth to accumulate in a small number of pockets. It might underinvest in health care, housing, or other critical areas.

Either way, the national debt isn’t unsustainable, and it isn’t a burden on anyone. We’ve been conditioned to fear the word “debt,” but we shouldn’t. It is no more than a record of our government’s investment in our future.