ROCHESTER, N.Y. (WROC) — The national debt in the United States topped $30 trillion last week. It’s an interesting topic that has been the sort of ‘elephant in the room’ for a long time. The $30 trillion debt currently exceeds the amount of the entire US economy, and that amount comes with interest — but perhaps not as much as you’d think. 

Inflation is on the rise, and interest rates could climb. That means the federal government and taxpayers will have a larger interest burden to bear. But financial experts like George Conboy with Brighton Securities say our economy is growing and soon could surpass the debt — meaning we’ll be able to make return payments with little problem. But if we hit another recession or depression, that could mean a bumpy road to repaying and future borrowing.

“I’m more concerned about the total amount of debt — can we make the payments, and what are interest rates going to do over the next few years to the federal government’s ability to keep up with that debt? Those are real concerns — but it’s not the end of the world,” says Conboy.

Narayana Kocherlakota, University of Rochester Professor of Economics, says while some other governments own a portion of our debt (about 25%, mostly with Japan and China), the biggest holder of US government debt is the US government, in other words, money it owes to itself. Other parts are pension funds or money owed to investors.

Kocherlakota says the debt should not be a major concern to Americans at this point. The problem with debt is off in the future. There will be more demand for spending on things like Medicare, Social Security — all with what could be a shrinking tax base to collect from. He says the government pays for debt by issuing or selling new debt; with interest rates so low, that’s not going to be a huge problem. Down the road the solution he said to pay down debt would be to raise taxes, or just cut spending. 

“I don’t just look at the quantity debt, but also at the interest rate at which the government can borrow. That interest rate remains very low. In fact, in real terms, what economists tend to look at, adjusting for inflation, really it’s negative, the rate at which the government can borrow…up to almost 20 years in terms. So, as long as interest rates remain as low as that, that’s telling us that there’s really not a problem with that at this point,” he says.

Kocherlakota adds that debt can actually be viewed as an indication of economic strength. “It’s a sign of how much our country is valued. That our debt really serves as a way of storing money and savings for people around the world, in a way that is just not true of other country’s debt,” he says.

Both experts did add the COVID-19 pandemic accelerated national spending, which is why we hit the $30 trillion mark faster than projected.