U.S. National Debt Hits $36 Trillion as Trump Team Prepares Cost-Cutting Measures

TLDR

• U.S. national debt has reached $36 trillion as of November 21, 2024
• Trump has appointed Elon Musk and Vivek Ramaswamy to head new Department of Government Efficiency (DOGE)
• Debt service costs expected to exceed $1 trillion next year, surpassing defense spending
• Musk suggests potential $2 trillion in government spending cuts
• Higher debt levels and interest rates may complicate Trump’s planned tax cut extensions

The United States has reached a new financial milestone as the national debt surpassed $36 trillion, according to recent Treasury Department data. This development comes as President-elect Donald Trump prepares to implement new measures aimed at reducing government spending and addressing 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 has announced the creation of a new Department of Government Efficiency (DOGE), to be led by Tesla CEO Elon Musk and businessman Vivek Ramaswamy. The department’s primary focus will be on reducing government expenditures, cutting regulations, and implementing cost-saving initiatives throughout federal agencies.

Musk expressed his concerns about the debt situation on social media platform X, describing the current debt level as “terrifying.” He noted that the national debt amounts to more than $106,000 per American citizen, highlighting 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, stating they would work with “a lean team of small-government crusaders” to pursue three main types of reform: regulatory rescissions, administrative reductions, and cost savings.

At a New York rally, Musk suggested the potential for $2 trillion in spending cuts, which would represent approximately 30 percent of the federal government’s total spending of $6.75 trillion in the most recent fiscal year. “At the end of the day, all government spending is taxation,” Musk stated, 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 surpass the federal government’s defense spending, reflecting the growing financial strain of servicing the debt.

Interest rates have played a crucial role in the increased cost of debt service. The yield on 10-year Treasury notes has risen to 4.4%, up substantially from the 0.6% seen in April 2020 during the pandemic. This increase in borrowing costs has implications for both government spending and consumer finances.

The U.S. currently holds the largest national debt globally, according to the International Monetary Fund. As a percentage of GDP, the American debt stands at 121%, though this ratio remains lower than countries such as Sudan (344%), Japan (251%), and Singapore (175%).

The Congressional Budget Office projects the federal debt will reach $56.8 trillion by 2034, raising concerns about long-term fiscal sustainability. The House Budget Committee has attributed this projection to “unsustainable federal and executive spending.”

The Trump transition team has addressed potential conflicts of interest, stating that DOGE and its participants will comply with all legal guidelines. David E. Lewis, a political science professor at Vanderbilt University, noted that while government inefficiency merits examination, careful attention must be paid to potential conflicts of interest involving the appointed leaders.

The debt situation may impact Trump’s plans to extend the 2017 tax cuts, which are set to expire next year. Some Republican lawmakers are reportedly looking to scale back these ambitions due to deficit concerns.

The majority of the national debt is held by the public, with Japan and China being major foreign holders. The increased debt service costs are already affecting government spending capabilities, with about one in five federal dollars now going toward debt repayment rather than investment in future economic growth.

Brian Riedl, a senior fellow at the Manhattan Institute, expressed concerns about renewing previous tax cuts given the current deficit levels.

“Clearly, it’s irresponsible to run back the same tax cuts after the deficit has tripled,” he stated.

Some analysts have proposed various solutions, including refusing to spend congressionally approved funds, though this approach could face legal challenges. Russell Vought, Trump’s choice 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, providing regular updates on this crucial economic indicator.