The $500 billion U.S. national debt has grown to more than $19 trillion since 2008, with a growing share of the burden being spent on health care and pensions.
In the latest fiscal year, the deficit rose to $965 billion, the biggest increase in the nation’s history, with health care spending up by $65 billion and public sector pensions up by almost $300 billion.
The country’s growing debt is putting pressure on the federal government to cut back on services, and a growing number of states are moving to close their pension funds, cutting benefits and making other changes to pay for the money.
Even with the money already spent, the federal deficit is projected to be $1.3 trillion by 2020, which is more than twice the amount of spending on Social Security and Medicare combined, according to the nonpartisan Congressional Budget Office.
But the growing burden on the economy, coupled with a looming recession, could push more states to seek cuts in their budgets.
“I think there is a growing awareness of this growing debt and how much we are spending, and there is going to be more pressure on states to cut,” said Joe Lynam, director of the Center for Budget and Policy Priorities, a nonprofit think tank that tracks federal spending.
States that are closing their pension plans, cutting funding for health care, or using the money to cover other spending cuts, could face increased scrutiny from the courts and other regulators, he added.
Many states are struggling to keep up with rising healthcare costs and the projected decline in federal spending over the next decade, Lynam said.
Some states are facing financial problems as well.
Several states, including Kentucky, Louisiana, New Jersey and North Carolina, have reported having significant financial difficulties.
A few have already filed for bankruptcy, and the U.K. has filed for Chapter 9 protection, according the government’s Office for Budget Responsibility.
There are also growing concerns that the economic slowdown could lead to an exodus of workers from the states that have been hit hardest by the financial crisis.
For now, though, the growing debt threatens to make it harder for the country to pay its bills.
While some states are spending less on the public sector and health care than they have in the past, the burden on state budgets is still enormous.
With $5.3 billion in the national debt, California’s budget deficit is nearly $6 billion larger than it was in fiscal year 2016, when the state’s debt was $11 billion.
In fiscal year 2019, the state had a $7.2 billion budget deficit, or more than triple the amount that it had in fiscal years 2017 and 2018.
As of last month, California had $19.5 billion in its general fund debt, or $17 billion more than it had a year earlier, according data from the California State Controller’s office.
California’s total state and local debt was about $4.2 trillion at the end of March.
New Jersey has the nations second-highest debt with a deficit of $1 trillion, and its deficit for fiscal year 2020 was $2.9 billion, more than three times the amount in fiscal 2020.
It had the second-largest deficit at $4 billion, but also has the lowest population of any state.
Lynam said that in some states, it’s hard to tell where the money comes from.
Most states are not required to disclose how they spend the money, or the amount they borrow, so it’s difficult to gauge how much the money is being spent.
At the end a few years ago, California and New Jersey’s debt levels were in line with the national average.
The average for the past few years has been in the high teens, Lyan said.
“We need to get this fixed,” Lynam added.
“There is a need to address the ballooning debt.
We need to change that.”
States with the highest levels of debt are: California ($19.7 trillion), North Carolina ($15.8 trillion), Tennessee ($10.4 trillion), Illinois ($9.5 trillion), Georgia ($9 trillion), Kentucky ($8.9 trillion)and Texas ($8 trillion).
Income inequality has been a major issue.
The United States ranks 37th among wealthy countries in terms of wealth and income inequality, according U.N. data.
Over the last three years, the United States has experienced the worst recovery from a recession since the Great Depression.
That recovery has brought back more than 3.3 million jobs and $1,400 per capita income, but many Americans still can’t find a job and their wages are still stagnant.
To help ease the burden of the economic downturn, states have been moving to make health care more affordable, to expand access to education, to make some of the benefits more affordable and to lower taxes