28 Trillion and Counting

By Charlie Bilello

03 Mar 2021

US National Debt has crossed above $28 trillion for the first time, increasing $4.6 trillion over the last year.

As a percentage of economic output (GDP), our national debt has never been higher, steadily increasing over the past 40 years from 31% in 1980 to 130% today…

Why is the ratio going up?

Simply put: we have been borrowing at a faster rate than the economy is growing – for a long time.

Over the last 15 years, the US National Debt has increased at a rate of 8.6% per year versus an increase in US economic growth (nominal GDP) of 3.2% per year.

This has been true during both recessionary and expansionary environments, and both Democratic and Republican administrations.

The one constant has been more debt.

From June 2009 through February 2020, we had the longest economic expansion in US history.

If there was ever a time when a “balanced budget” should have been possible, it would have been during these years.

But the budget was never balanced as there’s simply no appetite for the short-term pain that might come from slowing the borrowing binge. And so, during the longest expansion in US history, the National Debt more than doubled, rising from $11.5 trillion to $23.4 trillion.

When the pandemic recession hit back in March, the immediate solution from both parties was the same: borrow and spend like never before. And then have the Federal Reserve buy much of that new debt in an attempt to keep interest rates from rising.

With widespread fears of “another Great Depression,” there was almost no pushback against this strategy.

But as the economy recovered, a strange thing happened: the calls for adding more debt and sending out more free money continued, with little opposition.

Americans have never been more united on this one issue: the belief that there is absolutely no downside to borrowing from our children’s and grandchildren’s future so that we can spend more money today.

And so, within the next month, over a hundred million Americans who never lost their job during the pandemic are set to receive a tax-free stimulus check – for the third time. And this round is expected to be the largest yet.

All aboard the free money train. Next stop: $29 trillion.


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