Last updated on June 8, 2023
| As the US end talks about the debt ceiling once again, the tough question must be asked. Will the US ever pay off its debt? As of right now the answer is uncertain. The US has run a federal deficit since 2000, the last time the U.S. had a surplus of $ 0.24 trillion. That compared to 2022’s deficit of $1.36 trillion demonstrates just how much the US has become dependent on debt, and how fast it has developed. Who owns all of this debt? Most of the U.S. debt is held by the public through treasury bonds and bills. These offer investors fixed income or interest which is due to be paid at different rates and times. About 33% of this debt is held by foreign entities such as countries like China and Japan, who together hold more than $2 trillion of US debt. This creates issues, especially with tensions rising in the South China Sea. Not only does this make US-China relationships more complicated, it also puts a huge burden on the younger generations of Americans. With the US debt almost reaching $32 trillion, young Americans are concerned if we will ever be able to pay it off. As of right now, there is about $95,000 of debt per person living in the US. While this doesn’t mean each person will need to pay $95,000, it does demonstrate how much of a burden this may carry, especially in the years to come. All of this seems even scarier when considering that the median income in the US is just under $36k. There is however a silver lining to these debt talks. While the US debt crisis cannot be solved overnight, these talks have demonstrated to many Americans the risks that a default might bring. Along with this, it seems as though both Democrats and Republicans are realizing the need to collaborate and find compromise in situations such as these. While US debt doesn’t seem to be going away anytime soon, there is still hope that compromises can be made in the future to help eliminate this large burden. |
Complex Terms:
- Debt Ceiling- The limit at which the US is authorized to borrow(take on debt).
- Treasury Bills- Government security sold at discounted rate with obligation to be bought back at full rate.
- Treasury Bond- Government security yielding interest at different times and rates.
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