US starts fiscal year with record $31 trillion in debt
By FATIMA HUSSEIN
Edging closer to the statutory ceiling of roughly $31.4 trillion — an artificial cap Congress placed on the U.S. government’s ability to borrow — the debt numbers hit an already tenuous economy facing high inflation, rising interest rates and a strong U.S. dollar.
And while President Joe Biden has touted his administration’s deficit reduction efforts this year and recently signed the so-called Inflation Reduction Act, which attempts to tame 40-year high price increases caused by a variety of economic factors, economists say the latest debt numbers are a cause for concern.
Owen Zidar, a Princeton economist, said rising interest rates will exacerbate the nation’s growing debt issues and make the debt itself more costly. The Federal Reserve has raised rates several times this year in an effort to combat inflation.
Zidar said the debt “should encourage us to consider some tax policies that almost passed through the legislative process but didn’t get enough support,” like imposing higher taxes on the wealthy and closing the carried interest loophole, which allows money managers to treat their income as capital gains.
“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,” Zidar said.
Biden’s claim about lowering the annual deficit is nothing but pure hype. According to the Bureau of Labor statistics for fiscal year 2022, the national debt rose from 28. 4 trillion in October of 2021 to 31 trillion in October of 2022. That is an increase of 2.6 trillion dollars in one year, the second largest amount ever. For next year’s budget, the Biden administration has forecast a 1.3 trillion dollar debt, but if there is a recession next year it will likely be quite a bit higher.
It’s just money – print some more (or just spend some more – that will help).