Rama Krishna Sangem
Tesla & Space X boss Elon Musk has raised an alarm over the total debt burden of the US – at $ 37 trillion – piled up over the years. To pay even interest on this debt, American every year needs at around $ 952 billion. This debt servicing itself is a burden to the US in the present position. “If this continues, America goes de facto bankrupt and all tax revenue will go to paying interest on the national debt with nothing left for anything else,” said Musk on his own social media platform X on June 16, Monday.
Musk’s comments got 1.25,000 likes, 20 million views and 26,000 reposts. He posted a chart on the US debt over the last six decades which show that the burden was almost zero from 1960 to 75, but started raising steeply from 1985 onward. After 2005, the curve climbed up very high from $ 10 trillion to the present $ 37 trillion by 2025. Given the fact that the US annual budget for 2025 stands at $ 7.3 trillion which includes a deficit of $ 1.9 trillion, debt servicing too is a challenge to America.
Among the hundreds of commentators on this X post, there are some who suggested a Debt Jubilee – meaning cancellation of the entire debt or declaring bankrupt and defaulting on repayment. But, this is just impossible as it would lead to collapse of the world economy. Dozens of countries in the world have put in their savings and earnings into debt of the US. The lure of the US dollar’s stability and the superpower stature of America are the main reasons why many countries invest in the US bonds, securities and treasuries.
How this debt has piled up?
Though there is no clear analysis on how this debt pile up, the only superpower role played by the US after 1991, fall of Soviet Union, seems to be main contributing factor for it. Over the years after the USSR fall, American has spent huge amounts in the name of globalization. It has increased its share in every of multilateral bodies, be it the UN or IMF and World Bank. Dumped billions of dollars on military aid to NATO and other smaller countries in the name of fighting global terror.
Most of the debt increased during Democrat presidents’ terms. They believed in America’s role in the globalization and invested heavily in multilateral platforms. This why, Donald Trump, in his 2.0 avatar, is reversing all this. Increasing tariffs, cutting of free aid and unilateral military aid etc. Trump has even set up a DOGE, department of government efficiency, led by Musk. It’s main purpose is to cut the government spending. Of course, Musk had to quit DOGE, as he found it difficult to achieve the goal.
