Home Business U.S. National Debt Tops $33 Trillion for First Time

U.S. National Debt Tops $33 Trillion for First Time

by Mark Mendoza

America’s gross national debt has exceeded $33 trillion for the first time, highlighting the country’s unstable fiscal trajectory. This comes at a crucial time as Washington faces a potential government shutdown due to a fight over federal spending.

The Treasury Department reported this milestone in its daily balance sheet, coinciding with Congress struggling to fund the government before the September 30 deadline. If Congress fails to pass appropriations bills or extend federal funding at current levels, the United States will experience its first government shutdown since 2019.

Over the weekend, House Republicans considered a short-term proposal to reduce spending for most federal agencies and revive border initiatives from the Trump-era in order to extend funding until the end of October. However, this plan is unlikely to break the deadlock on Capitol Hill, as Republicans are divided on their demands and Democrats are unlikely to support any compromise reached within the Republican party.

The focus on the nation’s debt has intensified this year, highlighted by a prolonged standoff over raising the borrowing limit. A bipartisan agreement was eventually reached to suspend the debt limit for two years and cut federal spending by $1.5 trillion over a decade. Nevertheless, the debt is on track to surpass $50 trillion by the end of the decade, even after accounting for recently passed spending cuts, due to interest on the debt and the growing cost of social safety net programs.

Reducing the growth of the national debt remains a daunting task. Some federal spending programs, such as the Inflation Reduction Act of 2022, are projected to be more expensive than initially estimated. Pandemic-era relief programs also continue to burden the federal government financially, with the Employee Retention Credit costing $230 billion instead of the projected $55 billion.

President Biden’s attempts to increase revenue through tax changes have faced resistance. The Internal Revenue Service (IRS) has delayed policies that would generate additional tax revenue, such as requiring users of digital wallets and e-commerce platforms to report small transactions. Lobbyists are also pressuring for loopholes in new taxes, such as the corporate alternative minimum tax.

The opposition to revenue-raising measures and spending cuts has alarmed budget watchdog groups, who fear a looming fiscal crisis. The growing interest costs and inflation rates only exacerbate the damage to future generations. Republicans and Democrats in Congress remain divided on how to avoid a government shutdown, and lawmakers are urging leaders to focus on a stopgap bill to keep the government operating past September 30.

The Treasury Department’s latest report shows that the deficit for the first 11 months of the fiscal year was $1.5 trillion, a 61% increase from the same period last year. Treasury Secretary Janet Yellen expressed comfort with the nation’s fiscal direction, citing manageable interest costs as a portion of the economy. However, she emphasized the importance of considering future spending and the proposed measures by President Biden to reduce deficits while investing in the economy.

America’s growing national debt calls for urgent attention and bipartisan efforts to address the country’s fiscal challenges. The consequences of inaction could have severe long-term implications for the nation’s economic stability and the well-being of future generations.

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