Sunny Explains the National Debt: We Owe It to Ourselves

America's credit card statement arrived, and Sunny from the Department of Fiscal Responsibility could not be more delighted to read it to you.

The headline number: $34 trillion. The U.S. Treasury reported total public debt crossing that threshold on January 2, 2024, per Reuters — a figure so large that economists have quietly stopped trying to make it relatable. For context, if you stacked $34 trillion in single dollar bills, the stack would reach the moon and back several times, and Congress would still find room for one more continuing resolution on top.

But the number Sunny is proudest of is the interest bill. In fiscal year 2024, the United States spent $879.9 billion just on interest payments for its debt — more than the $873.5 billion it spent on national defense, according to CBO and Treasury data compiled by GovFacts. That was the first time since 1940 that the cost of borrowing exceeded the cost of the military. The country now spends more paying for past spending than on defending itself in the present. Sunny calls this "fiscal synergy."

The comforting part — and Sunny always saves the comforting part for last — is that we mostly owe the money to ourselves. The Congressional Research Service notes that foreign investors hold only about 23 to 30 percent of U.S. public debt, which means roughly 70 to 77 percent is held domestically: by American banks, pension funds, the Federal Reserve, and the Social Security trust funds. So when the debt collectors come, they'll be collecting from the neighbors. Awkward, but efficient.

None of this is new, of course. The debt has been climbing through every administration, every party, and every solemn promise to take it seriously. What changed is the interest rate environment: when rates were near zero, a $34 trillion tab was a rounding error in the federal budget. Now the tab has interest, and the interest has its own line item, and the line item is bigger than the Pentagon.

Sunny's official position, delivered with a smile: the debt is fine because it is ours. The numbers, delivered without one, suggest the smile is doing a lot of heavy lifting.

Sources: Reuters (Treasury daily statement, January 2024) — https://d2233.cms.socastsrm.com/2024/01/02/total-u-s-public-debt-tops-34-trillion-as-congress-heads-into-funding-fight/ ; GovFacts / CBO Budget Outlook (FY2024 interest vs. defense) — https://govfacts.org/money/broader-economy/budget-deficits-national-debt/us-national-debt-37-trillion-and-growing/ ; Congressional Research Service (domestic vs. foreign holdings) — https://www.congress.gov/crs_external_products/RS/PDF/RS22331/RS22331.51.pdf

Evidence Locker entry: sunny-national-debt. See the reel: https://www.instagram.com/reel/Dd9T5S3on5O/