Xinhua News Agency, Washington, October 4th (International Observation) The “barbaric growth” of the US national debt exceeding 31 trillion US dollars has caused concern
Xinhua News Agency reporter Xiong Maoling
The latest data released by the U.S. Treasury Department shows that the size of the federal government’s debt has exceeded $31 trillion, just over eight months following the size of the debt exceeded $30 trillion, further approaching the legal debt ceiling of $31.4 trillion. In the context of the U.S. government’s continued expansion of fiscal spending and the Fed’s continuous interest rate hikes, the “savage growth” of U.S. government debt has raised concerns.
Data shows that as of October 3, the outstanding federal government debt in the United States was regarding $31.1 trillion, of which the public held regarding $24.3 trillion and the intergovernmental debt was regarding $6.8 trillion, which has greatly exceeded the total amount of the United States last year. Annual gross domestic product of regarding 23 trillion US dollars.
The Peter Peterson Foundation of the United States pointed out that U.S. fiscal spending had already embarked on an unsustainable path before the outbreak of the new crown epidemic. Structural driving factors existed long ago, and the epidemic has rapidly exacerbated the fiscal challenges of the United States. In response to the new crown epidemic, the government has introduced multiple rounds of fiscal relief measures and relied on bond issuance to raise funds.
The foundation’s chief executive, Michael Peterson, said the accumulation of federal debt was the result of repeated “irresponsibility” by both Democrats and Republicans in Congress over fiscal issues. Over the past few decades, Washington politicians have repeatedly opted to cut taxes or push through government spending plans rather than thinking regarding America’s future.
According to the foundation’s statistics on the 4th, the US$31 trillion debt is more than the combined economic size of China, Japan, Germany and the United Kingdom. Allocating this huge debt to the American people is equivalent to $236,000 in debt per household and $93,000 per person. If every American household contributes $1,000 a month in repayments, it would take 19 years to pay off all debt.
With the Federal Reserve raising interest rates sharply, the interest cost of federal debt has risen significantly. Peterson said too many people were complacent regarding the U.S. debt path, in part because interest rates were too low before. And as debt and interest rates rise, many concerns regarding the path of debt growth begin to emerge.
The foundation expects the federal government to spend $1 trillion more on interest over the next 10 years due to rising interest rates.
Just five years ago, the federal government’s total debt hit $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 budget responsibly. Yet the U.S. government is still borrowing. This year alone, Congress and the White House have approved $1.9 trillion in new borrowing. Biden has approved a new deficit of $4.9 trillion since taking office. “We’re addicted to debt,” McGuinness said.
A research report released by the U.S. Bipartisan Center for Policy Research shows that the federal government has hit the then-$28.9 trillion debt ceiling at the end of October 2021. Since then, the U.S. Treasury Department has taken unconventional measures to avoid debt defaults until the U.S. Congress passed legislation in December that year to raise the debt ceiling to $31.4 trillion.
High and rising U.S. debt poses not only a challenge to U.S. finances, but also the future of the U.S. economy.
McGuinness pointed out that the United States faces significant fiscal challenges ahead. Medicare is just 6 years away from bankruptcy, and Social Security is just 12 years away. However, policymakers have yet to come up with any plans to build a solid financial foundation for the two programs.
The long-term impact of federal debt on the U.S. economy cannot be ignored either. The Congressional Budget Office (CBO) issued a report earlier this year warning that rising debt will increase borrowing costs for the private sector, leading to lower business investment and a drag on economic growth over time. In addition, the risk of investors losing confidence in the solvency of the U.S. government will rise, which might lead to a sudden rise in interest rates, an inflationary spiral or other disruptions, and the likelihood of a U.S. fiscal crisis will increase.
Peterson said that high debt is related to the future economic health of the United States and intergenerational fairness. The huge and rising debt will make the United States unable to better cope with climate change, the next pandemic, and build an inclusive economy.
In addition, economists generally believe that if the US debt truly defaults, the consequences will be more serious and may even trigger an international financial crisis.
