US hits $38T in debt. Fastest accumulation of $1T outside pandemic

Impact on Interest Rates and the Real Economy

• Several comments link rising federal debt to higher Treasury yields, which become the floor for consumer credit (mortgages, auto loans, credit cards).
• Higher rates are seen as likely to slow the economy via more expensive borrowing, though some argue the impact is muted because a large share of spending comes from the top 10%, who are less credit-constrained.
• Others note the Fed’s policy rate is the more direct driver of consumer rates, but Treasury yields set the long-term “rate floor” and define spreads for packaged consumer debt.

Who Owns the Debt and What a Default Means

• Debt is largely held via Treasuries by: the Federal Reserve, other federal entities (e.g., Social Security trust fund), mutual and pension funds, insurance companies, banks, foreign governments, and some crypto stablecoins.
• Multiple commenters stress that one party’s debt is another’s asset; writing it off would vaporize pensions, bank capital, and corporate balance sheets.
• A true default is described as an “extinction-level” financial event, far beyond typical crises, given Treasuries’ central role as global collateral.

Does the Debt Level Itself Matter?

• Some argue sovereign issuers can’t “run out of money” and that expectations about inflation and currency value matter more than the absolute debt stock.
• Others emphasize that rapid changes in borrowing and the growing share of revenue going to interest (headed toward ~20%) are dangerous constraints on future policy.
• Several note that exponential-looking debt growth is structurally tied to percentage returns and population/price growth, but still unsustainable if deficits outpace GDP.

Entitlements, Safety Net, and Moral Tradeoffs

• Big drivers of spending: Social Security, Medicare/Medicaid, and interest; SNAP is repeatedly described as small (~0.2% of total debt equivalent) and likely net-positive for health and the economy.
• There is sharp disagreement over cutting benefits (especially SNAP) versus raising taxes on high earners and corporations.
• Many frame cutting food, healthcare, or retirement benefits as morally unacceptable, especially given record corporate profits and extreme wealth concentration.

Tax Policy, Partisanship, and Structure of the Budget

• Commenters note that “discretionary” items Congress fights over are a small slice; most spending is mandatory by prior law.
• There’s debate over which party is more fiscally responsible: some blame tax cuts for the rich; others say both parties overspend and rely on cheap borrowing.
• Proposals include restoring pre-recent tax cuts, beefing up IRS enforcement, deep healthcare-cost reforms, and even constitutional “debt brakes” modeled on Switzerland.