Latest news with #WendyEdelberg
Economic Times
6 days ago
- Business
- Economic Times
U.S. national debt soars past $37 trillion — now bigger than the economy; is Trump's record tariff windfall enough as deficit hits historic highs? Key numbers inside
U.S. national debt stood at nearly $37 trillion, already surpassing the size of America's entire $30.3 trillion economy. The United States has just crossed a fiscal threshold many economists once thought was years away. As of August 12, 2025, Treasury data shows the gross national debt has reached $37 trillion — an all-time record and more than double the country's total economic output. What makes this moment more complex is that it comes during a period when federal revenues, especially from tariffs, are soaring under President Donald Trump's aggressive trade policies. Yet the deficit is still widening. This debt figure wasn't supposed to appear until after 2030, according to earlier Congressional Budget Office projections. Instead, a mix of pandemic-era borrowing, expanded social spending, and tax changes has pushed the timeline forward by at least five years. The pace is startling: the U.S. is adding about $1 trillion every five months, twice the average rate of the past quarter-century. For comparison, it took the country more than 200 years to accumulate its first $1 trillion in debt, a milestone reached in 1981. Economist Wendy Edelberg, a senior fellow at the Brookings Institution, warns that 'this kind of debt growth is not sustainable without crowding out investment and pushing borrowing costs higher.' The government's interest payments are already consuming more than $1 trillion annually, surpassing even national defense spending. Against this backdrop, Trump's latest tariff package — which imposes steep duties on a broad range of imports, from Chinese electronics to European luxury goods — has delivered a short-term revenue spike. Treasury figures show customs duties in July jumped 273% year-over-year, bringing in roughly $21 billion for the month. For trade hawks in the administration, this is proof that tariffs can be a 'revenue weapon' as well as a geopolitical lever. A senior White House economic adviser, speaking on background, said importers had accelerated shipments to beat upcoming tariff hikes, temporarily inflating revenue. Even with this windfall, the U.S. ran a $291 billion deficit in July — up nearly 20% from the same month last year. Over the first ten months of fiscal 2025, the deficit has totaled $1.629 trillion, a 7% rise from the same period in 2024. The reason is simple: spending growth is outpacing income. Social Security obligations, Medicare costs, and higher interest payments on the existing debt have more than offset tariff revenue gains. 'It's like getting a raise but increasing your lifestyle spending even faster,' one Treasury official before Congress approved President Donald Trump's sweeping tax and domestic spending package, the federal government was already barreling toward one of the largest deficits in modern history. The nonpartisan Congressional Budget Office (CBO) had projected that Washington would spend $1.9 trillion more than it collected this fiscal year — a shortfall now set to deepen sharply. With Trump's so-called 'megabill' signed into law, the CBO warns the legislation will add nearly $3.4 trillion in new deficit spending over the next decade. The measure also raised the federal debt ceiling by $5 trillion to $41.1 trillion, but even that lifeline may prove short-lived. The CBO forecasts the nation's debt will smash through $52 trillion by the end of fiscal 2035. As of Aug. 8, the national debt stood at nearly $37 trillion, already surpassing the size of America's entire $30.3 trillion economy. The debt-to-GDP ratio — a measure economists use to gauge fiscal health — has climbed to 119.4%, up from pre-pandemic levels near 80% and not far from the 2020 record of 132.8%. Debt growth has surged during three major periods: the Reagan-Bush deficits of the 1980s and early 1990s, the Great Recession of 2008–09, and the COVID-19 pandemic. The current wave is being driven by soaring entitlement costs, rising interest payments, and fresh fiscal stimulus. Private investors hold the largest share — about two-thirds of the total, or $24.4 trillion — while federal trust funds like Social Security and Medicare hold another $7.3 trillion. The Federal Reserve owns $4.6 trillion in Treasuries. Foreign ownership remains substantial, with Japan leading at $1.1 trillion, followed by the U.K. ($809.4 billion) and China ($756.3 billion). Mutual funds, pension funds, banks, and state governments also hold significant chunks. The fastest-growing line item in the federal budget isn't Medicare or the Pentagon — it's interest on the national debt. In fiscal 2024, the U.S. paid $879.9 billion in net interest, surpassing both Medicare ($874.1 billion) and defense ($873.5 billion). That burden is rising fast as the Federal Reserve's higher interest rates push up borrowing costs. The average rate on federal debt has more than doubled since January 2022, jumping from 1.556% to 3.352% as of July 2025. Trump's record-setting tariffs have pumped billions into federal coffers, including $21 billion in July alone, yet the deficit continues to balloon. Treasury data shows the U.S. is adding about $1 trillion to its debt every five months — a pace unseen in modern fiscal history. The Congressional Budget Office estimates Trump's tariffs could reduce deficits by up to $2.8 trillion over the next decade — but that projection assumes steady import flows and no major trade retaliation. Many economists are skeptical. Chad Bown of the Peterson Institute for International Economics points out that tariffs also act as a tax on consumers and businesses, potentially slowing economic growth and dampening other tax receipts. 'You might get a sugar high in revenue,' he said, 'but the long-term diet is less healthy.' For most households, the impact of Washington's fiscal numbers feels abstract — until it isn't. Higher debt can influence mortgage rates, credit card interest, and the stability of the U.S. dollar. Tariffs, meanwhile, can push up the price of everything from smartphones to home appliances. In essence, Americans are facing a two-sided squeeze: fiscal policies that raise costs in the short term (tariffs) and debt growth that could raise borrowing costs in the long term. Heading into the 2026 midterms, fiscal policy is shaping up as a defining battleground. Trump is betting that voters will see tariffs as a tool of economic nationalism and revenue recovery. Democrats argue the policy is a hidden tax and that runaway deficits risk undermining the economy's resilience. With debt climbing and deficits persisting despite record tariff revenues, the U.S. is entering uncharted territory — one where fiscal discipline and political will may soon be tested in ways not seen for decades. Q1. Why did U.S. debt reach $37 trillion so fast? Because heavy borrowing, pandemic spending, and rising interest costs accelerated debt growth years ahead of forecasts. Q2. Are Trump's tariffs reducing the U.S. deficit? Not yet — tariff revenue is rising, but overall spending still far outpaces income.
Bloomberg
25-07-2025
- Business
- Bloomberg
Trump Takes Powell Rift to Fed's Headquarters
"Balance of Power: Late Edition" focuses on the intersection of politics and global business. On today's show, Wendy Edelberg, Brookings Institution Economic Studies Senior Fellow, shares her thoughts on President Trump and Federal Reserve Chair Jerome Powell touring the Federal Reserve building renovations. Rep. Debbie Wasserman Schultz (D-FL) discusses Congress facing a September 30 budget deadline and whether or not she'd be in favor of Democrats potentially shutting down the government. Rep. Bryan Steil (R-WI) discusses releasing the Epstein files, talks of a second rescissions package, and President Trump's visit to the Federal Reserve building. (Source: Bloomberg)
Bloomberg
24-07-2025
- Business
- Bloomberg
Edelberg Sees Creeping Loss of Fed Independence
Wendy Edelberg, Brookings Institution Economic Studies Senior Fellow, shares her thoughts on President Trump and Federal Reserve Chair Jerome Powell touring the Federal Reserve building renovations and states that the President putting the Fed's credibility at risk is "nothing but bad for the US economy." She also goes into detail about concerns of the President and Fed independence. Wendy speaks with Joe Mathieu and Tyler Kendall on the late edition of Bloomberg's "Balance of Power." (Source: Bloomberg)
Bloomberg
11-07-2025
- Business
- Bloomberg
Trump Tours TX Damage, Renews Immigration Crackdown
On the early edition of Balance of Power, Bloomberg Washington Correspondents Joe Mathieu and Kailey Leinz discuss President Trump's trip to Texas, renewed tariff threats, and the economic impact of his immigration crackdown. On today's show Representative Gwen Moore (D-WI), Stonecourt Capital Partner Rick Davis, Center for the Study of the Presidency and Congress Senior Democracy Fellow Jeanne Sheehan Zaino, and Senior Fellow in Economic Studies at the Brookings Institution Wendy Edelberg. (Source: Bloomberg)
CNBC
03-07-2025
- Business
- CNBC
Fed can't justify cutting rates right now, says The Manhattan Institute's Allison Schrager
Allison Schrager, The Manhattan Institute, and Wendy Edelberg, The Brookings Institution, joins 'Squawk Box' to discuss the latest jobs report.
