The US national debt surpassed $36 trillion for the first time on November 15. Paying interest on this massive debt is already a burden.
“If we don’t act, the country will default, the dollar will be worthless,” Tesla and SpaceX founder and CEO Elon Musk commented in a recent podcast with popular host Joe Rogan.
Musk’s warning focused on the growing US national debt, which now stands at more than $36 trillion. Interest payments on this debt are already a burden and a strain on public finances.
“Interest payments are already 23 percent of the government’s total revenue, and that number continues to grow. So if we don’t do anything, the entire government budget will be spent on interest, and there will be no money for anything. No money for Social Security, no money for Medicare, nothing. That’s what bankruptcy means,” Musk explained.
“I look at the numbers here and I think, if we don’t do something, America is going to default,” he warned.
In fiscal year 2024, the US government will pay more than $1 trillion in interest on public debt, while tax revenue will reach about $4.9 trillion.
Whether the United States could technically go bankrupt is a complicated question because the federal government cannot file for reorganization. Meanwhile, printing money to keep operating has significant consequences, as inflation erodes the purchasing power of the dollar.
Analysts at JP Morgan said the risk of a US default was “extremely low”. This is because the US benefits from a “unique position” in issuing debt in its own currency, which is also the global reserve currency, along with a strong tax base that could help boost revenue through tax reform if needed.
