Xinhua News Agency, Washington, Oct. 4 (International Observation) “Wild Growth” in US National Debt Exceeding $ 31 Trillion Worries
The reporter from the Xinhua news agency Xiong Maoling
The latest figures released by the US Treasury Department show that the federal government’s debt size surpassed $ 31 trillion, just over eight months after the debt size surpassed $ 30 trillion, getting even closer to $ 30 trillion. legal debt ceiling of $ 31.4 trillion. In the context of the continued expansion of US government fiscal spending and the Fed’s continued interest rate hikes, the “wild growth” of US public debt has raised concerns.
Data shows that as of October 3, the federal government debt outstanding in the United States was about $ 31.1 trillion, of which the public held about $ 24.3 trillion, and the intergovernmental debt was about $ 6.8 trillion. , which far exceeded the total amount of the United States last year an annual gross domestic product of about $ 23 trillion.
The Peter Peterson Foundation of the United States pointed out that U.S. fiscal spending had already taken an unsustainable path before the outbreak of the new corona epidemic. States. In response to the new corona epidemic, the government introduced multiple rounds of tax relief measures and relied on issuing bonds to raise funds.
The foundation’s chief executive, Michael Peterson, said the federal debt buildup was the result of repeated “irresponsibility” by both Democrats and Republicans in Congress on tax matters. Over the past few decades, Washington politicians have repeatedly chosen to cut taxes or push through government spending plans rather than think about America’s future.
According to the 4 founding statistics, the $ 31 trillion debt is more than the combined economic size of China, Japan, Germany and the UK. Assigning this huge debt to the American people equates to $ 236,000 of debt per family and $ 93,000 per person. If every American family contributes $ 1,000 a month in repayments, it would take 19 years to pay off all debts.
With the Federal Reserve rising sharply in interest rates, the interest cost of federal debt has risen significantly. Peterson said too many people are content with the US debt path, in part because interest rates were too low before. And as debt and interest rates rise, many concerns about the debt growth path begin to emerge.
The foundation expects the federal government to spend $ 1 trillion more in interest over the next 10 years due to rising interest rates.
Just five years ago, the federal government’s total debt reached $ 20 trillion, said Maya McGuinness, chair of the Committee on Accountability for the Federal Budget, an independent research organization in the United States. Now is the time to plan responsibly. Yet the US government is still borrowing. This year alone, Congress and the White House approved new loans worth $ 1.9 trillion. Biden has approved a new $ 4.9 trillion deficit since he took office. “We are addicted to debt,” McGuinness said.
A research report released by the US Bipartisan Center for Political Research shows that the federal government hit its $ 28.9 trillion debt ceiling at the end of October 2021. Since then, the US Treasury Department has took unconventional measures to avoid debt defaults until the United States Congress passed a law in December of that year to raise the debt ceiling to $ 31.4 trillion.
The high and rising US debt poses not only a challenge to US finances, but also the future of the US economy.
McGuinness stressed that the United States faces significant fiscal challenges. Medicare is only 6 years from bankruptcy and Social Security is only 12 years. However, policy makers have yet to come up with plans to build a solid financial foundation for the two programs.
The long-term impact of federal debt on the US economy cannot be ignored either. The Congressional Budget Office (CBO) released a report earlier this year warning that rising debt will increase borrowing costs for the private sector, leading to a reduction in business investment and a brake on economic growth over time. . It will also increase the risk of investors losing confidence in the US government’s solvency, which could lead to a sudden rise in interest rates, an inflationary spiral or other disruption, and increase the likelihood of a US fiscal crisis.
Peterson said high debt correlates with the future economic health of the United States and intergenerational equity. The huge and growing debt will render the United States unable to better deal with climate change, the next pandemic and build an inclusive economy.
Furthermore, economists generally believe that if US debt actually defaulted, the consequences would be more serious and could even trigger an international financial crisis.
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