The US Debt Problem Gets Worse

📆This Week’s Topic

Today, I would like to talk about the US debt. We talked about US debt before inthis article. With the return of the Trump Administration and heavy tariffs that are in place, the debt situation has changed drastically. So today I will discuss with you the new and worsening debt problem. The US needs to work on shaving its debt, with over $36 trillion of federal government debt, and it is growing by about $2.41 trillion each year.

💳 Cause & Effect

In the article I linked in the previous paragraph, I discussed the debt problem in the newsletter back at the end of January. We talked about the US debt and how it keeps getting worse and worse. This changed a lot when Trump announced the tariffs. A prediction from late March states from the US Congressional Budget Office that the government may run out of money by May. This could cause huge problems if they don’t get time to borrow money by May. This is a huge problem for the federal government because it consistently needs money for the day-to-day operations.

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📊 Statistics

Even if the government has time to borrow more money, they will borrow more money and could increase the US debt more. $2.41 trillion is how much they borrowed last year if they need to borrow a similar amount next year, it could be about the same. The Congressional Budget Office also has uncertainty about President Trump possibly implementing more tax breaks, which could cause the situation with the U.S. Debt to possibly get even worse.

🔚 Outcome

One of the outcomes is that the debt will just keep growing unless we do something. Every year, the federal government takes out more loans and get more debt. We are close to a date when the federal government needs to pay its bills and has no remaining funds to do so. That will result in the U.S. government possibly defaulting on there debt, which they have never done before. This is why US federal government bonds are usually considered safe investments. But if the federal government defaults on its loans and debt, it could potentially lose its reputation as a government and also as a safe investment.

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⛱ Consumer Effect

If the federal government decides to default on its loans, fewer people will likely invest in federal government bonds. I discuss how this is already happening in this article. Another important perspective to consider is that the US government could lose reputation in the situation that the government loans are defaulted.

🏢Other Possibilities

I am hoping, along with the majority of Americans, that the government can receive funding before May to avoid defaulting on their loans. If they don’t, they will keep operations as usual, and our debt will keep increasing. By the end of the decade, our country will have up to $50 trillion in federal government debt. This could make it virtually impossible to clear up our debt anytime soon. We need to start paying off the government debt. We could start doing this soon by paying, for example, $500 million per year to our debt. We could do this by ending tax breaks and making room for it in the budget.

⏳ Final Summary

In summary, the US needs to manage its debt more effectively and take action. The government could start by paying off a small amount per year. If they don’t get a new loan soon, they could start defaulting on their loans. That could result in Americans losing money on their government loan. The government has never defaulted on its loans, which is why federal government loans are normally considered a very safe investment in the bond market.

🙏Thank You & Important Information

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Jacob Gans

Friday Finance