The gross national debt exceeded $32 trillion for the first time on Friday, underscoring the country’s shaky fiscal trajectory as Washington prepares for another battle on government spending.
A Treasury Department report noted the milestone ending a months-long impasse, weeks after Congress agreed to suspend the nation’s statutory debt limit.
The $32 trillion mark arrived nine years earlier than pre-pandemic forecasts, reflecting trillions of dollars of emergency spending to cushion the impact of COVID-19 as well as address sluggish economic growth.
Republicans and Democrats have expressed concern about the nation’s debt, but neither party has shown the appetite to tackle its biggest drivers, such as spending on Social Security and Medicare.
According to the Congressional Budget Office, a recent bipartisan agreement suspending the debt ceiling for two years cut federal spending by $1.5 trillion over a decade, essentially projected to increase next year and then slash spending by 1.5 trillion. limited to a percentage increase. 2025. But even with recently passed spending cuts, the debt is set to top $50 trillion by the end of the decade.
Mark Zandi, chief economist at Moody’s Analytics, said during the impasse in May that the spending cuts proposed by lawmakers failed to address the cost of Social Security net programs. Avoiding default may have prevented the immediate crisis, he said, adding that balloon loans are an ongoing problem that needs to be addressed.
“The nation’s daunting long-term financial challenges remain,” Mr. Zandi said.
This week, the House Appropriations Committee began considering its next spending bills and, to appease the ultraconservative wing of the Republican majority, indicated it would fund federal agencies at lower levels than President Biden and Speaker Kevin McCarthy have called for. Will give
Failure to pass and reconcile the House and Senate bills by October 1 could result in a government shutdown. And if individual bills are not approved by the end of the year, a 1 percent automatic cut will take effect.
Meanwhile, House Republicans this week began considering a new round of tax cuts. The bill would expand the standard deduction and certain business tax benefits for individual taxpayers, which are intended to spur investment while curbing energy tax credits. The Responsible Federal Budget Committee, which advocates lower spending levels, estimates that making the measures permanent would cost the proposed legislation $80 billion, or $1.1 trillion over a decade.
Some have called for Congress to create a bipartisan fiscal commission to deal with the long-term drivers of the national debt.
“As we sail past the $32 trillion mark with no end in sight, it is a good time to address the fundamental drivers of our debt, which are inevitable spending growth and a lack of sufficient revenue to fund it,” Michael A. Peterson, said Chief Peter G. Peterson Foundation executive, which promotes deficit reduction.
The Peterson Foundation expressed concern about projections that put the United States at $127 trillion in debt over the next 30 years and that interest costs cost nearly 40 percent of all federal revenue by 2053.
Treasury Secretary Janet L. Yellen defends Biden administration’s one-time handling of nation’s finances House Financial Services Committee hearing this week, Noting that the White House released a budget this year that reduced the deficit by $3 trillion. It also told the panel that interest rates are likely to decline in the medium term, making the debt burden more manageable.
The Treasury Secretary suggested that the tax policies promoted by Republicans would worsen the financial situation.
“They will benefit wealthy individuals and corporations and do nothing for working families,” Ms Yellen said. “It hasn’t been paid for, and it will increase the debt.”