U.S. opens fiscal year with $31 trillion debt

According to a U.S. Treasury report issued Tuesday, the national debt has surpassed $31 trillion.

The debt levels are hammering an already fragile economy experiencing high inflation, increasing interest rates, and a strong U.S. currency.

Even though President Biden has hailed his administration’s deficit reduction efforts this year and signed the Inflation Reduction Act, experts are concerned about the newest debt data.

Rising interest rates would compound the nation’s debt and make it more expensive, says a Princeton economist. The Fed hiked rates four times this year to fight inflation.

Zidar said the debt “should inspire us to explore those tax ideas that nearly passed but didn’t garner enough support,” such as greater taxes on the rich and addressing the carried interest loophole, which enables money managers to classify profits as capital gains.

“If you weren’t concerned about debt before, you should be now,” Zidar added.

The Congressional Budget Office published a study on America’s debt burden this year, warning that if unchecked, the debt would soon rocket higher to new highs that might threaten the U.S. economy. If investors lose trust in the U.S. government’s capacity to service its debt, interest rates and inflation might rise, the CBO warned.

The U.S. would spend “significantly” more on interest payments as interest rates climb under the Fed’s rate rises, the CBO said. It highlighted it may harm U.S. finances.

“Debt-addicted”

In its August Mid-Session Review, the government predicted that this year’s budget deficit would be about $400 billion lower than it estimated in March, thanks to stronger-than-expected revenues, less expenditure, and an economy that has regained all the employment lost during the epidemic.

This year’s deficit will fall by $1.7 trillion, the greatest drop in U.S. history, according to OMB.

Maya MacGuineas, head of the Committee for a Responsible Federal Budget, remarked, “No one should feel proud.”

“In the last 18 months, we’ve seen inflation hit a 40-year high, interest rates increase to battle it, and budget-busting legislation and presidential actions,” MacGuineas added. We’re debt-addicted.

Treasury Department representative unavailable for comment.

Loyola Marymount University economics professor Sung Won Sohn remarked, “It took this country 200 years to accumulate its first trillion dollars in national debt, and since the epidemic we’ve been accumulating 1 trillion virtually every quarter.”

“When you expand government expenditure and money supply, you’ll pay afterwards,” he warned.