US national debt tops $31 trillion

US national debt tops $31 trillion
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Economy

The United States' public debt has soared past $31 trillion, according to a Department of the Treasury report that was released this week.

The "grim milestone," The New York Times explained, "comes at an inopportune moment, as historically low interest rates are being replaced with higher borrowing costs as the Federal Reserve tries to combat rapid inflation. While record levels of government borrowing to fight the pandemic and finance tax cuts were once seen by some policymakers as affordable, those higher rates are making America’s debts more costly over time."

The ever-accumulating balance – $31,123,887,781,401.34 as of Monday – comes at the start of the federal government's fiscal year, which began on Saturday, October 1st. Last December, Congress raised its borrowing power or "debt limit" to $31,381,462,788,891.71.

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This development has economists concerned that rising interest rates coupled with steep inflation could trigger a recession and make future repayment efforts more difficult. They noted that these predictions are despite President Joe Biden signing the Inflation Reduction Act into law.

On Tuesday, Princeton economist Owen Zidar told The Washington Post that the surging debt “should encourage us to consider some tax policies that almost passed through the legislative process but didn’t get enough support,” adding that “I think the point here is if you weren’t worried before about the debt before, you should be — and if you were worried before, you should be even more worried."

Notably, the budget deficit is projected to fall by $1.7 trillion this year, which the Congressional Budget Office touted in August as the largest drop in American history.

But that footnote is doing little to ease the unsettling feelings shared by economists.

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“This is a new record no one should be proud of," said Maya MacGuineas, the president of the Committee for a Responsible Federal Budget. “In the past 18 months, we’ve witnessed inflation rise to a 40-year high, interest rates climbing in part to combat this inflation, and several budget-busting pieces of legislation and executive actions. We are addicted to debt.”

The Post also quoted Loyola Marymount University economics professor Sung Won Sohn, who stressed that “it took this nation 200 years to pile up its first trillion dollars in national debt, and since the pandemic, we have been adding at the rate of 1 trillion nearly every quarter.”

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