For the first time on Tuesday, America’s gross national debt surpassed $30 trillion, in part due to the coronavirus pandemic and what economists describe as years of unsustainable government spending that could impact every American.
The latest debt milestone comes at a delicate time as borrowing costs are expected to rise and have major impacts on the economy.
An increase in debt will lead to lower national income and savings. This will eventually lead to larger tax hikes and spending cuts.
The $30 trillion fiscal debt is made up of $23.487 trillion in public debt; individuals, businesses, and pension funds, and $6.525 trillion in intergovernmental borrowings.
The Democrats are arguing that the budget projections were made ahead of the pandemic. They added the $1.9 trillion pandemic relief package and $5 trillion spent on stimulus checks, jobless benefits, and on other financial support as it was necessary to keep the market afloat and curb inflation.
President Joe Biden’s $2 trillion safety net and climate spending proposals are bearing the brunt of former President Trump’s decision to spend borrowed money to meet the $1.5 trillion tax cut. The Graphs show that the Fed’s decision to raise interests without evaluating the fiscal burden will affect long-term economic growth.
The Congressional Budget Office 2020 had previously projected a $30 trillion borrowing cap close to the end of 2025.
The US witnessed a budget surplus from 1998 to 2001 under President Bill Clinton, thanks to proper fiscal planning. Upcoming presidents exhausted the surplus and went on a borrowing spree, creating an unsustainable structural fiscal path with borrowings weighing down on revenue.
