Well, that was fast! The national debt has reached a milestone, or should it be described as a millstone? President Joe Biden and House Speaker Kevin McCarthy (R-CA) marketed the Fiscal Responsibility Act (FRA) as a terrific plan to suspend the debt limit and tackle the nation's astonishing debts and deficits. As Liberty Nation has previously reported, the bipartisan package does nothing to clean up the country's red ink; the latest record-breaking number proves this assertion. Only in Washington can tens of billions of dollars in savings still lead to trillions in new debt.
Laughing in National Debt
According to the Treasury Department's daily statement, the national debt crossed the $32 trillion milestone on June 16. This includes $25 trillion in debt held by the public and approximately $7 trillion in intragovernment debt. On June 3, Biden signed the FRA into law. This means that it took the federal government less than two weeks to reach this astronomical figure. Of course, it is unsurprising since Washington borrowed nearly $400 billion in a single business day.
The latest national debt news comes soon after the Treasury confirmed that the US government budget deficit topped $1 trillion in the current fiscal year, soaring an extra $240 billion in May. In the first eight months of fiscal year 2023, the cumulative deficit totaled $1.165 trillion, driven by a 21% decline in year-over-year revenue, a 20% increase in spending, and a significant jump in net interest payments.
Taxpayers should anticipate growth in the national debt to continue. Despite the FRA, it is still expected to top $50 trillion by 2033, with $1 trillion annual deficits as the new normal. But this is just the tip of the iceberg when you consider total unfunded liabilities – especially Medicare and Social Security – which are close to $200 trillion, or $572,000 per citizen.
As the Italians say, that’s a spicy meatball!
Got Any Change?
Some of the leading experts and groups on this topic say it is critical that lawmakers address the fundamental drivers of the national debt, including mandatory spending growth and a paucity of sufficient revenues to fund these outlays.
Maya MacGuineas (Photo By Tom Williams/CQ Roll Call)
For example, the Peter G. Peterson Foundation, a think tank tasked with studying economic and fiscal issues, is worried about the $127 trillion in debt over the next 30 years and interest payments accounting for about 40% of all revenues by 2053. Maya MacGuineas, president of the Committee for a Responsible Federal Budget (CRFB), noted that more must be done to prevent future generations from being burdened with a larger national debt that will eat away at America’s finances.
It might be a bitter pill to swallow, but the only time these worries are considered is during debt limit sagas. Despite both sides of the aisle claiming during these political theater shows that they can talk about the budget anytime throughout the year, the reality is that they do not otherwise discuss Uncle Sam’s dollars and cents. Sure, some fiscal bipartisan commission might be established – this was recommended coming out of the debt limit deliberations – but anyone who has monitored the nation’s capital will know that hearings accomplish very little except for allowing politicians to look busy and kill time, embracing the George Costanza method.
Refiling America’s Bank Account
Now that the uncertainty is over and about $4 trillion will be added to the national debt by January 2025, at least the American people can take solace in the fact that the Treasury General Account – the department's bank account at the Federal Reserve – continues to be refilled, topping $250 billion. Of course, this has been driven by selling more short-term government bonds in the financial markets rather than any fiscally responsible efforts. And yet, even with all this pecuniary chaos in the nation’s capital, the United States will successfully kick the can down the road until the international marketplace loses faith in the government and the greenback. Until policymakers are prescribed stinging medicine (hint: de-dollarization), Capitol Hill will continue to get away with reckless spending and deficits.
