“United States’s $33 Trillion Debt Crisis: Are We Headed for Economic Disaster?”

United States’s $33 Trillion Debt Crisis

Washington, On Monday, the United States‘ total national debt crossed the $33 trillion mark, underscoring the country’s hazardous economic trajectory as Washington struggles with the prospect of a second government shutdown during a standoff over federal spending this month.

As Congress attempted to finance the government before the deadline of September 30, exhibiting signs of stalling in its efforts to provide financial support to the government, the Treasury Department acknowledged this milestone in its daily report.

Unless Congress can pass a dozen appropriations bills or agree on a short-term extension of federal funding at current levels, the United States could face its first government shutdown since 2019.

Over the weekend, House Republicans considered a short-term measure that would cut spending for most federal agencies and revive the Trump-era hard cap on spending until the end of October.

However, this plan had little chance of breaking the deadlock on Capitol Hill, as Republicans remain divided over their demands, and Democrats are unlikely to support any compromise among themselves.

This year, the debate over debt has intensified, with prolonged resistance to raising the borrowing limit and a looming showdown over increasing the country’s debt ceiling for an extended period.

That fight ended with a two-year suspension of the debt limit and a bipartisan agreement to cut $1.5 trillion in federal spending over a decade, obligating a few funds to halt that was expected to increase next year and limiting spending growth to 1% in 2025.

 Despite recent efforts to curb spending, the debt is on track to reach over $50 trillion by the end of the decade as interest on the debt rises and the cost of the nation’s social safety net programs increases.

However slowing the growth of the national debt has proven to be a challenge. During the Biden administration, some federal spending programs have turned out to be more expensive than initially estimated.

 The 2022 infrastructure reconciliation law was estimated to cost nearly $400 billion in the first decade, but according to Penn Wharton Budget Model estimates, due to generous clean energy tax credits, its cost could exceed $1 trillion.

The relief programs of the pandemic era are still costing the federal government money. The Internal Revenue Service estimated last week that the Employee Retention Credit, a tax benefit that was initially expected to cost about $55 billion, has now cost the federal government over $230 billion due to concerns about fraud and abuse.

Additionally, President Biden has faced resistance in his efforts to generate more revenue through tax changes.

At the end of 2022, the IRS delayed a provision in the new tax policy that requires reporting of small transactions on digital wallets and e-commerce platforms, which was expected to generate approximately $8 billion in additional tax revenue over a decade.

Last month, the IRS further delayed a provision that would prevent high-income earners from making additional contributions to their 401(k) retirement accounts for two years. The agency described the delay as an “administrative transition period.”

Meanwhile, advocacy groups for budget restraint are concerned that budget watchdogs are sounding the alarm that a fiscal crisis is looming.

Peter G. Peterson Foundation’s Chief Executive Michael A. Peterson added, “The cost of debt can suddenly and sharply increase, as we’ve seen with rising interest rates and debt costs.”

“With anticipated debt interest charges to exceed $10 trillion in the next decade, this debt spiral will only harm our children and grandchildren.”

To avoid the problem of a near-term government shutdown, both Republicans and Democrats in the House and Senate are divided over the path forward, and lawmakers have started pushing leaders to concentrate on a temporary bill that would keep the government open past September 30.

But the red ink keeps rising. Last week, a report from the Treasury Department revealed that the deficit – the gap between what the United States spends and collects through taxes and other revenue sources – was $1.5 trillion for the first 11 months of the fiscal year, a 61% increase from the same period a year ago.

Janet L. Yellen, the secretary of the Treasury, spoke with CNBC on Monday. said she was comfortable with the nation’s fiscal course, given the role interest rate management played as a part of the country’s fiscal program. However, she suggested vigilance in the face of future expenditures.

As we make investments in the economy, the president has recommended a number of steps that would gradually lower our deficits. According to Secretary Yellen, it’s crucial to implement these measures. be alert to future spending.” “Some of it is things that we need to do.

In Washington, On Monday, the United States’ total national debt reached $33 trillion for the first time, illustrating the country’s dire economic trajectory as Washington struggles with the of another government shutdown amid a showdown over federal spending this month.

As Congress attempted to finance the government before the deadline of September 30, exhibiting signs of stalling in its efforts to provide financial support to the government, the Treasury Department acknowledged this milestone in its daily report.

Unless Congress can pass a dozen appropriations bills or agree on a short-term extension of federal funding at current levels, the United States could face its first government shutdown since 2019.

Over the weekend, House Republicans considered a short-term measure that would cut spending for most federal agencies and revive the Trump-era hard cap on spending until the end of October.

However, this plan had little chance of breaking the deadlock on Capitol Hill, as Republicans remain divided over their demands, and Democrats are unlikely to support any compromise among themselves.

The debate over the debt has been more heated this year as a result of persistent opposition to expanding the borrowing cap and an impending showdown over boosting the nation’sfor an extended period of time, the debt ceiling.

That fight ended with a two-year suspension of the debt limit and a bipartisan agreement to cut $1.5 trillion in federal spending over a decade, obligating a few funds to halt that was expected to increase next year and limiting spending growth to 1% in 2025.

Despite recent efforts to curb spending, the debt is on track to reach over $50 trillion by the end of the decade as interest on the debt rises and the cost of the nation’s social safety net programs increases.
But slowing the growth of the national debt has proven to be a challenge.

During the Biden administration, some federal spending programs have turned out to be more expensive than initially estimated.

The 2022 infrastructure reconciliation law was estimated to cost nearly $400 billion in the first decade, but according to Penn Wharton Budget Model estimates, due to generous clean energy tax credits, its cost could exceed $1 trillion.

The relief programs of the pandemic era are still costing the federal government money. The Internal Revenue Service estimated last week that the Employee Retention Credit, a tax benefit that was initially expected to cost about $55 billion, has now cost the federal government over $230 billion due to concerns about fraud and abuse.

Additionally, President Biden has faced resistance in his efforts to generate more revenue through tax changes. At the end of 2022, the IRS delayed a provision in the new tax policy that requires reporting of small transactions on digital wallets and e-commerce platforms, which was expected to generate approximately $8 billion in additional tax revenue over a decade.

Last month, the IRS further delayed a provision that would prevent high-income earners from making additional contributions to their 401(k) retirement accounts for two years. The agency described the delay as an “administrative transition period.”
Meanwhile, advocacy groups for budget restraint are concerned that budget watchdogs are sounding the alarm that fiscal crisis is looming.

Peter G. Peterson Foundation’s Chief Executive Michael A. Peterson added, “The cost of debt can suddenly and sharply increase, as we’ve seen with rising interest rates and debt costs.”

“With anticipated debt interest charges to exceed $10 trillion in the next decade, this debt spiral will only harm our children and grandchildren.”

To avoid the problem of a near-term government shutdown, both Republicans and Democrats in the House and Senate are divided over the path forward, and lawmakers have started pushing leadersto concentrate on a temporary bill that would keep the government open past September 30.

But the red ink keeps rising. Last week, a report from the Treasury Department revealed that the deficit – the gap between what the United States spends and collects through taxes and other revenue sources – was $1.5 trillion for the first 11 months of the fiscal year, a 61% increase from the same period a year ago.

Why the $33 trillion national debt doesn’t concern Janet Yellen? Credit: finance.yahoo.com



Janet L. Yellen, the secretary of the Treasury, spoke with CNBC on Monday. Yellen said she was comfortable with the nation’s fiscal course, given the role interest rate management played as a part of the country’s fiscal program. However, she suggested vigilance in the face of future expenditures.
As we make investments in the economy, the president has recommended a number of steps that would gradually lower our deficits. According to Secretary Yellen, it’s crucial to implement these measures. be alert to future spending.” “Some of it is things that we need to do.”

Leave a Comment