Powell on $39 Trillion National Debt: “Not Unsustainable”
Jerome Powell is wary of the rising rate of national debt but says it can be sustained for a while longer.
Quick overview
- Jerome Powell, the Federal Reserve chairman, stated that the current $39 trillion national debt is sustainable but on an unsustainable trajectory.
- He emphasized the need for government action to curb spending and address the growing debt, which is increasing faster than before.
- Powell's concerns about the debt are compounded by rising costs due to conflicts, particularly in the Middle East, which contribute to higher gas prices and national debt.
- Despite the high debt levels, Powell noted that the U.S. economy can sustain this debt longer than other countries due to its status as a major lender.
Jerome Powell, the Federal Reserve chairman who has repeatedly clashed with President Donald Trump, spoke Monday about the $39 trillion in national debt, calling it “not unsustainable.”
Powell said that even though the current U.S. debt level can be sustained, it is on a trajectory that according to him will not end well. These comments were made at Harvard University while speaking to an economics class. He said that the current debt is not going to be dangerous right away but will in time require action from the government to deal with it.
He warned that something needs to be done soon to curb spending and reduce the national debt. Powell has pushed back against efforts to cut interest rates, concerned that such cuts will lead to higher inflation. This stance has brought him into conflict with Trump multiple times, and the Trump administration has launched an investigation into Powell’s affairs in an effort to (according to Powell) discredit him or replace him.
The Rising Cost of War Takes Its Toll
The conflict in the Middle East has caused gas prices in the United States to soar around $4 per gallon. The price of oil has climbed to over $100 a barrel, making this precious commodity less and less affordable over the past few weeks. Any time the United States is involved in a conflict like this, the national debt climbs higher. That is because an international war involves extensive resources to deploy troops and supplies over long distances. The United States spares little expense in extending its supply lines to the fighting area.
Those costs tend to trickle down to consumers, resulting in higher prices as the government works to make back its costs. That all adds up over time, but even the mounting pile of national debt is not enough to cripple the U.S. economy. Because the country is a major lender to other nations, it can sustain high levels of debt for longer than other countries might be able to.
Powell shared his specific concerns about the national debt to students, saying that the debt is growing faster than it has previously. The incredible spending required to do all of the things President Trump has tried to do is tremendous and is building up the debt level faster than it can be paid off. Powell says that will lead to conditions that are not sustainable at some point. Interest payments for the national debt are now calculated to be around $1 trillion per year.
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