The nation’s gross national debt has surpassed $31 trillion, according to a US Treasury Department report released Tuesday, which charts America’s daily finances.
Debt numbers are edging closer to the legal ceiling of around $31.4 trillion — an artificial ceiling imposed by Congress on the US government — hitting an already struggling economy grappling with high inflation, rising interest rates and a strong US dollar is faced.
And while President Joe Biden has touted his administration’s efforts to reduce the deficit this year and recently signed the Inflation Reduction Act, which seeks to tame 40 years of high inflation caused by a variety of economic factors, economists say, that the latest debt figures are a cause for concern.
Princeton economist Owen Zidar said rising interest rates would exacerbate the nation’s growing debt problems and make the debt itself more expensive. The Federal Reserve has hiked interest rates several times this year to fight inflation.
Zidar said the debt “should encourage us to consider some tax policies that almost made it through the legislative process but didn’t get enough support,” such as levying higher taxes on the wealthy and closing the carried-interest loopholes, which allow money managers to treat their income as capital gains.
“I think the point here is if you weren’t worried about the debt before then you should be – and if you were worried before then you should be even more worried,” Zidar said.
The Congressional Budget Office released a report on America’s debt burden earlier this year and in its 30-year outlook warned that if left unaddressed, the debt will soon soar to new highs that could ultimately threaten the US economy.
In its mid-August meeting review, the government forecast that this year’s budget deficit will be nearly $400 billion lower than it had estimated in March, partly due to higher-than-expected revenue, lower spending and an economy that is struggling has regained all jobs lost during the multi-year pandemic.
Overall, this year’s deficit will decrease by $1.7 trillion, the largest fall in the federal deficit in American history, the Office of Management and Budget said in August.
Maya MacGuineas, president of the Federal Budget Committee, said in an emailed statement Tuesday, “This is a new record that no one should be proud of.”
“In the last 18 months, we have seen inflation spike to a 40-year high, a partial rise in interest rates to combat that inflation, and multiple budget-wrecking legislation and executive branch actions,” MacGuineas said. “We are addicted to debt”
A Treasury official was not immediately available for comment.
Sung Won Sohn, an economics professor at Loyola Marymount University, said, “It took this nation 200 years to accumulate its first trillion dollars in national debt, and we’ve added $1 trillion almost every quarter since the pandemic.”
He predicted high inflation for the “foreseeable future,” he said, “if you increase government spending and the money supply, you will pay the price later.”
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https://abc13.com/national-debt-nation-gross-us-interest-rates-inflation-reduction-act/12296984/ US National Debt: The country’s gross national debt has exceeded $31 trillion