Wed. Sep 20th, 2023
    The US Gross National Debt Reaches $33 Trillion Amid Looming Shutdown

    The gross national debt of the United States has surpassed $33 trillion, highlighting the country’s unstable fiscal trajectory as Congress faces the possibility of a government shutdown. The Treasury Department announced this milestone, coinciding with Congress’s struggle to fund the government ahead of the September 30 deadline. If Congress fails to pass appropriations bills or agree to a short-term funding extension, the US could face its first government shutdown since 2019.

    House Republicans have proposed a short-term plan to cut spending for federal agencies and revive border initiatives from the Trump era to secure funding through the end of October. However, this plan is unlikely to break the impasse on Capitol Hill, as Republicans remain divided and Democrats are unlikely to support any compromise. The debate over the national debt has become increasingly contentious, with the recent standoff over raising the borrowing cap resulting in a bipartisan agreement to suspend the debt limit for two years and implement $1.5 trillion in spending cuts.

    Despite these measures, the national debt is expected to surpass $50 trillion by the end of the decade due to mounting interest payments and the increasing costs of social safety net programs. Slowing the growth of the debt remains a significant challenge, especially with some federal spending programs projected to be more costly than anticipated. For example, the Inflation Reduction Act of 2022, initially estimated to cost $400 billion over a decade, may now surpass $1 trillion due to high demand for the law’s clean energy tax credits.

    Pandemic relief programs and delays in implementing tax changes have also contributed to the mounting debt. Claims for the Employee Retention Credit have already cost the federal government $230 billion, far exceeding the original estimate of $55 billion. Meanwhile, attempts to raise revenue through tax changes have faced resistance, with the IRS delaying new policies that would require reporting of digital wallet transactions and limiting contributions to 401(k) retirement accounts.

    Lobbyists are also pressuring for loopholes in new taxes, such as the corporate alternative minimum tax. These pressures, along with the resistance to revenue increases and spending cuts, have raised concerns among budget watchdog groups that a fiscal crisis is imminent. The deficit for the first 11 months of the fiscal year was $1.5 trillion, a 61 percent increase compared to the same period last year.

    Treasury Secretary Janet L. Yellen stated that she is comfortable with the nation’s fiscal course, as interest costs as a share of the economy remain manageable. However, she emphasized the importance of being mindful of future spending and the need to reduce deficits while investing in the economy.

    Sources: The New York Times