US National Debt Tops $30 Trillion
Throughout the pandemic, the U.S. government spent $7 trillion on COVID-19 relief to avert a recession.
The $30 trillion debt milestone comes at a time when many of the COVID-19 relief programs have expired. Lawmakers now find themselves “at a time of transition for U.S. fiscal and monetary policy,” WSJ says.
Investors are also awaiting signals from the Federal Reserve as to when it will begin raising short-term interest rates, now near zero, to tamp down inflation, now running at 7%.
Commenting on the $30 trillion groundbreaking figure, Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget, tells WSJ: “This is a jaw-dropping number that is a real cause for concern. It is the result of both borrowing for really important crises—most notably the COVID pandemic—but also trillions and trillions of borrowing for no reason other than politicians [who] have stopped being willing to pay the bills.”
Michael Peterson, chief executive of the Peter G. Peterson Foundation, another nonpartisan group, adds, “The milestone of $30 trillion in debt should be a giant red flag for all of us about America’s future economic health, generational equity, and role in the world.”
During both the Trump and the Biden administrations, Congress authorized trillions in relief to assist small businesses, unemployed workers, parents and renters, primarily through the expanded child tax credit, enhanced unemployment benefits and the Paycheck Protection Program.
Treasury Secretary Janet Yellen told the World Economic Forum in January: “In response to the downturn in the economy induced by the pandemic, we felt, and I strongly believe, that it was appropriate to engage in spending that wasn’t financed by tax increases.”
Yellen added that due to the current low interest rate environment, Treasury believes the U.S. debt is “very manageable.”
US Deficit Now 12.4% of GDP
According to the Congressional Budget Office, before the pandemic, in the fiscal year ended September 2019, the U.S. deficit was 4.7% of gross domestic product (GDP). In the fiscal year ended September 2021, the federal budget deficit of $2.8 trillion had grown to 12.4% of U.S. GDP.
It is this concern over the U.S. deficit that has kept Congress from passing President Biden’s $2 trillion Build Back Better infrastructure bill including provisions for education, health care and climate change, according to WSJ.