The national debt has ballooned to $33.8 trillion dollars, which is 124% of the United States' GDP. Yahoo Finance spoke to Moody's Analytics Chief Economist Mark Zandi, who outlined why this is a "big problem" for the country claiming that "we are going to be paying, soon, more in interest expense on our debt than we do to fund our defense budget." Questions now arise as to how serious the problem is and what steps can the government take to alleviate this issue.

Maya MacGuineas, President of the Committee for a Responsible Federal Budget (CRFB), joins the Live show to give insight into what steps the government can take and how much investors need to worry about this mounting issue.

"If you take this year so far in terms of our actual deficit, how much we borrowed, it was much worse than it should have been — it basically doubled from a previous year during a period where the economy was strong," MacGuineas says. "But at the same time, lawmakers actually passed policies that improved the situation significantly. Really notable because it's the first time that's happened in a decade."

Click here to watch the full interview on the Yahoo Finance YouTube page or you can watch this full episode of Yahoo Finance Live here.

Video Transcript

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DIANE KING HALL: The nation's debt stands at about $33.8 trillion. That's about 124% of the country's GDP. The government can only really raise taxes and cut spending, but is that enough to get a handle on the debt. Lawmakers are working on it. Some are calling on a commission to come up with realistic ways to approach it. Last week, we spoke to Mark Zandi, chief economist at Moody's, about the ballooning debt. And this is what he had to say.

MARK ZANDI: It's a big problem because debt plus higher rates means higher interest payments. Here's a factoid for you. We're going to be paying soon more in interest expense on our debt than we do to fund the our defense budget. I mean, that doesn't make any sense whatsoever. So we've got to make some changes.

And if you look at current law, if we make no changes in tax policy or spending policy, it's just unsustainable. Our debt load is going to rise to a place where the interest rates are going to rise. The economy is going to cave under the weight of all of that. So we've got to make some changes.

DIANE KING HALL: Now as the year wraps up it's time to balance the country's checkbook and how it impacts markets. For more on this, we have Maya MacGuineas of the Committee for a Responsible Federal Budget president. So, Maya, we want to weigh in on this with the debt thermometer, if you will. What does the debt thermometer tell us about where we stand? And are we in a danger zone?

MAYA MACGUINEAS: Right. Yeah. So one of the really helpful things about the tool of the debt thermometer I think is it tracks all of the policies that are implemented in a year and what their effects are going to be on the debt going forward. So if you take this year so far in terms of our actual deficit, how much we borrowed, it was much worse than it should have been. It basically doubled from the previous year during a period where the economy was strong.

But at the same time, lawmakers actually passed policies that improved the situation significantly. Really notable because it's the first time that's happened in a decade. The deficit reduction came almost exclusively from the Fiscal Responsibility Act, which was that negotiation they had around the debt ceiling. They avoided debt defaulting. And they put in place some spending caps that were going to limit the budget going forward.

But here's the rub. So far, they haven't actually been able to agree on those spending caps. So we're not sure whether they'll stay in place. Plus, there's a lot of very important emergency spending. They're probably going to have to pass at the end of the year. Foreign aid for all the emergencies around the world. And the question is, will they be willing to offset those costs or not?

So while the debt thermometer is looking good so far this year, there's still a couple of weeks left. And there's real concern that the situation is going to get even worse than it has been. And obviously, going forward, just like Mark Zandi was saying, the debt situation is unsustainable. Very bad. Big changes need to be made.