US begins fiscal year with record $31 trillion in debt, close to debt limit

The country’s gross national debt has exceeded $31 trillion, according to a US Treasury report released Tuesday, which logs America’s daily finances.

Close to the statutory limit of about $31.4 trillion – an artificial cap on the US government’s borrowing ability from Congress – debt numbers face an already weak economy. Highest inflation in 40 yearsRising interest rates and a stronger US dollar.

Even President Joe Biden has touted his administration’s deficit reduction efforts this year and most recently signed the so-called Inflation Reduction Act, a measure of high price increases due to a variety of economic factors. Economists say the latest debt is the number one cause for concern.

Princeton economist Owen Zieder said rising interest rates would exacerbate the country’s growing debt issues and make debt more expensive. The Federal Reserve has raised rates several times this year in an effort to combat inflation.

Zidar said the debt “should encourage us to consider some tax policies that almost went through the legislative process but didn’t get enough support,” such as levying higher taxes on the wealthy and closing interest loopholes, which keep money managers from falling. allows them to be treated. Income in the form of capital gains.

“I think the point here is that if you weren’t worried about debt before, you should be — and if you were worried before, you should be even more concerned,” Zidar said.

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The Congressional Budget Office released a report on America’s debt load earlier this year, warning in its 30-year outlook that, if no resolution is taken, the debt will soon rise to new highs that will eventually hit the US economy. could put it at risk. The CBO warned that if unchecked, investors could lose confidence in the US government’s ability to repay its debt, which would result in rising interest rates and increased inflation.

And as interest rates rise — because they are now under the Federal Reserve’s rate hike regime — the US will be forced to spend “significantly” more on interest payments, the CBO said. It said this could weaken the US fiscal position.

“addicted to debt”

In a mid-August session review, the administration estimated this year’s budget deficit to be about $400 billion lower than projected in March, due to stronger-than-expected revenues, slashed spending and an economy that’s slowed down. All lost jobs have been recovered. During the multi-year pandemic.

Overall, this year’s deficit will drop by $1.7 trillion, representing the largest drop in the federal deficit in US history, the Office of Management and Budget said in August.

“This is a new record that no one should be proud of,” Maya McGinnis, chair of the Committee for a Responsible Federal Budget, said in an emailed statement Tuesday.

“Over the past 18 months, we’ve seen inflation hit a 40-year high, interest rate hikes to counter this inflation, and a number of budget-busting legislation and executive actions,” McGinnis said. “We are addicted to debt.”

A representative for the Treasury Department was not immediately available for comment.

Sung Won Sohn, an economics professor at Loyola Marymount University, said, “It took 200 years for this country to pile up its first trillion dollars in national debt, and since the pandemic we’ve been adding up to $1 trillion almost every quarter.” “

Predicting higher inflation for “the foreseeable future”, he said, “When you increase government spending and the money supply, you will pay the price later.”

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