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U.S. Treasury Reports $34 Trillion Debt 

The United States faced a critical economic situation as its national debt hit a record $34 trillion. This development foreshadowed significant political and economic challenges in managing the nation’s finances. 

Report from the Treasury and Debt Ceiling Agreement 

Photo Credit: @janet__yellen on instagram

The U.S. Treasury Department’s recent report highlighted rising tensions in Washington over fiscal management. In June, an agreement was reached to temporarily lift the debt ceiling until January 2025, preventing a historic default. 

Surge in National Debt

Washington DC, USA – October 16, 2007: The Treasury Department building — Photo by artavet

Surpassing expectations, the national debt reached $34 trillion, years ahead of the Congressional Budget Office’s pre-pandemic projection of 2029. This increase was largely fueled by heavy borrowing during the Trump and Biden administrations to support the economy during the pandemic. 

Read More: Lawmakers Rally Against Biden’s Ceiling Fan Energy Regulation 

Economic Repercussions of Pandemic Response 

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The government’s response to the pandemic, involving substantial financial stimulus, led to unexpected economic challenges. This included a surge in inflation and a rise in interest rates, escalating the cost of debt servicing. 

Perspective on Government Spending 

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Economist Sung Won Sohn, from the Loyola Marymount University, expressed concern about unsustainable government spending in an interview with Associated Press. 

“So far, Washington has been spending money as if we had unlimited resources,” he warned, “But the bottom line is there is no free lunch,” highlighting the grim economic outlook. 

Gross Debt vs. Public Debt 

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The gross national debt stands at $34 trillion, but policymakers often focus on the public debt, which is around $26.9 trillion. This figure closely mirrors the size of the U.S. GDP. 

Also Read: US Air Force Considers Removing AC-130 Gunship’s Iconic 105mm Howitzer 

Long-Term Debt Forecast 

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According to the Congressional Budget Office, the publicly held debt could reach a record 181% of U.S. economic activity by 2053. This projection raises concerns about the country’s future financial stability. 

Current Economic Impact and Foreign Holdings 

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Despite the high debt, the U.S. economy remains stable due to ongoing investor confidence. However, there’s a notable decline in foreign holdings of U.S. debt, from 49% in 2011 to 30% by the end of 2022, as per a Peterson Foundation analysis. 

Peterson Foundation’s Warning 

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Michael Peterson, CEO of the Peterson Foundation, emphasized the urgency of the debt issue. He stated, “Adding trillion after trillion in debt, year after year, should be a flashing red warning sign to any policymaker.” 

Read More: Trump’s Former National Security Adviser Blasts Barack Obama for Misinformation 

Individual Burden and Long-Term Risks 

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The national debt translates to about $100,000 per U.S. citizen. Experts warn of long-term risks, including potential inflation and elevated interest rates, which could impact the national economy severely. 

Democratic vs. Republican Strategies for Debt Reduction 

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Democrats propose tax increases on the wealthy and corporations, alongside IRS budget enhancements for improved tax collection. Republicans, however, advocate for cuts in non-defense spending and oppose clean energy tax credits and spending from the Inflation Reduction Act. 

Political Implications and Blame Game 

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The national debt issue is poised to be a central theme in the upcoming presidential election. White House spokesman Michael Kikukawa criticized Republican policies for creating “trickle-down debt,” while Republicans attribute the 2022 inflation spike to borrowing under the Biden administration. 

Also Read: Tensions Rise as Iran Protests Russian Stance on Hormuz Islands 

Investor and Rating Agency Concerns 

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Growing apprehensions among investors and rating agencies about the sustainability of the U.S. debt trajectory are evident.  

A complex challenge to address 

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The U.S. national debt issue presents a complex challenge requiring balanced fiscal strategies and bipartisan cooperation. As policymakers debate solutions, the nation’s economic future hangs in the balance, with potential global implications. 

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