Biden Hits Historic First — But He Won’t Be Proud Of This One

US Debt Crosses $31T Mark for First Time

US Debt Crosses $31T Mark for First Time

(LibertySons.org) – The US government’s new fiscal year began on October 1, and the Treasury Department started out with a rather alarming announcement. The country would begin the period with the highest debt level on October 3 — $31,123,887,781,401.34. That’s over $31 trillion worth of obligations the US government owes to creditors.

The State of the Economy

The deficit differs from the debt in that it represents how much the government spends versus how much it brings in. That amount of overspending increased substantially during the COVID-19 pandemic. The number started at $984 billion in 2019 but ballooned to over $3.1 trillion in 2020 and only reduced slightly to $2.7 trillion in 2021.

Throughout the pandemic, officials took advantage of historically low interest rates, and now the country could pay the price. Inflation recently began taking on a life of its own, growing to historic highs. To combat it, the Federal Reserve increased interest rates, which will only add to the national debt because it costs more to borrow money. In fact, the higher rates could add $1 trillion to the obligation number in interest alone.

Predictions and the Future

The Congressional Budget Office (CBO) predicted the deficit would shrink to $1 trillion in 2022 but grow by about $1.6 trillion annually from 2023 to 2032, barring any law adjustments. Assuming all other things equal, the total deficit addition would be $15.7 trillion over those years. Historically, the yearly deficit was about 3.5% of gross domestic product (GDP), but the CBO believes that percentage will be at or over 4.5% of GDP from 2025 to 2032.

There are also the looming worries about a recession. The stock market is already in turmoil as it fell sharply in September. A rally on October 4 sparked cautious hopes in the investment world looking forward.

Another concern is that the current debt is coming dangerously close to the debt ceiling, which is currently $31.4 trillion. If the US reaches this limit, the Treasury Department would have to default on the country’s loans. The good news is Congress controls the number and has historically increased it when needed. Even so, if the US defaults, it would cause significant impacts on a global scale.

Help from the White House

The only way to combat the ever-increasing deficit is for the government to take the right steps. In May, President Joe Biden said his “top economic priority” was bringing down inflation. He also stated part of doing that was lowering the national deficit, with his main objective being to raise taxes on the wealthy.

In August, he signed the Inflation Reduction Act into law and promised “it’ll lower the deficit.” The legislation changed the tax code to raise liability for high earners, promised to aid the IRS in its efforts to crack down on those not paying what they owe, and imposed a 15% minimum corporate tax. The CBO estimated it would decrease the deficit by $58.1 billion from 2022 to 2031.

~Here’s to Our Liberty!

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