National Debt at $34 Trillion and Counting!

Unfortunately for most Americans, this historic debt level has been achieved as Congress is racing to finalize critical funding bills necessary to avoid another government shutdown. Under current law, the debt is expected to skyrocket to 181% by the end of 2053. According to the Congressional Budget Office, increased interest rates are the biggest concern, because as interest rates rise, the borrowing cost for the federal government also increases. As a matter of fact, interest payments on the National Debt are projected to be the fastest-growing part of the federal budget over the next three decades.  Due to increasing interest rates, debt payment expenses are expected to triple from nearly $475 billion in fiscal 2022, to a stunning $1.4 trillion in 2032. Allowed to continue at these rates, interest payments are projected to surge to $5.4 trillion, by 2053. To put that expense into perspective, those payments will be equal to more than we currently spend on Social Security, Medicare, Medicaid and all other mandatory and discretionary spending programs combined. The previous economic danger level was passed shortly after Biden took over the country’s helm, when the National Debt surpassed our Gross National Product, in 2021. In 2020, federal tax revenues were $3.42 trillion and the good news is that they increased to a record $4.71 trillion in 2023. We are currently working successfully to avoid entering a recession. Generally speaking, economic pundits suggest that Congress should only spend what it earns, but outside of one year under Clinton, that hasn’t happened in many decades. Deficit spending is a tool Congress can use to expand economic growth and stimulus spending to create jobs during a recession. Following a recession, governmental gears should shift from an expansionary fiscal policy to a contractionary fiscal policy, because that’s the best time to raise taxes, thereby reducing the deficit and National Debt. As an added bonus, it also keeps the economy from forming dangerous bubbles, or overheating.