The United States marked a historic milestone on Monday as its gross national debt soared past $33 trillion, an all-time high. Concurrently, the nation’s capital, Washington, D.C., is on the brink of a possible government shutdown due to concerns surrounding federal spending.
The Daily Wire, on Tuesday, September 19, 2023 reported that this alarming revelation comes amidst growing concerns over the possibility of a government shutdown in Washington, D.C., fueled by apprehensions about federal spending.
Data released by the Treasury Department underscores the gravity of the situation, with the national debt soaring to an eye-popping $33.04 trillion.
Remarkably, this figure comes just a few short months after it crossed the $32 trillion mark in mid-June.
The implications of this escalating debt have not gone unnoticed, and prominent voices in fiscal responsibility are sounding the alarm.
Maya MacGuineas, President of the Committee for a Responsible Federal Budget, didn’t mince words in her reaction to the latest figures.
“Debt held by the public, meanwhile, recently surpassed $26 trillion. We are becoming numb to these huge numbers, but it doesn’t make them any less dangerous.”
Her words underscore the increasing danger posed by the nation’s mounting debt.
The Congressional Budget Office has further exacerbated these concerns by confirming that the underlying deficit is expected to double from the previous fiscal year to the current one, a development that MacGuineas noted.
The office had previously cautioned in June that the combination of high interest rates and a burgeoning national debt could potentially result in net interest payments skyrocketing to a concerning 6.7% of GDP by 2053, as reported by Fortune.
MacGuineas criticized the absence of comprehensive solutions and the reluctance of leaders to confront this pressing issue head-on, given the critical nature of the problem.
In an attempt to address these looming challenges, House Republicans unveiled a short-term proposal on Sunday.
This proposal aimed to secure temporary funding for the government through October 31, thereby averting a potential shutdown.
Additionally, it called for an 8% spending reduction across federal agencies, excluding funding for defense, veterans affairs, and disaster relief, as reported by Fox Business.
However, the proposal was met with resistance from fellow GOP lawmakers, while Democrats remained unlikely to support it.
Michael A. Peterson, the CEO of the budget watchdog group Peter G. Peterson Foundation, heightened concerns by warning of an impending federal crisis.
He emphasized that the cost of debt can escalate rapidly, especially in the face of recent inflation and rising interest rates.
Peterson pointed out that with over $10 trillion in interest costs projected over the next decade, the compounding fiscal cycle could have severe repercussions for future generations.
“As we have seen with recent growth in inflation and interest rates, the cost of debt can mount suddenly and rapidly,” Peterson cautioned.
Mark Spitznagel, founder of the hedge fund Universa Investments, had previously raised a red flag about the potential consequences of the increasing debt.
He described the current situation as the “greatest credit bubble in human history” and issued a stark warning that credit bubbles inevitably burst, though the timing remains uncertain.
“We’ve never seen anything like this level of total debt and leverage in the system,” Spitznagel cautioned.
“It’s an experiment. But we know that credit bubbles have to pop. We don’t know when, but we know they have to.”
U.S. Treasury Secretary Janet Yellen adopted a more optimistic tone, stating that she isn’t overly concerned about the staggering debt levels.
She maintained that the net interest as a share of GDP remains within control for the federal government, even with the recent uptick in interest rates.
Nevertheless, she acknowledged the need for caution in future spending to ensure a sustainable trajectory.
Yellen highlighted President Joe Biden’s signing of the Fiscal Responsibility Act in June, which suspended the debt limit until January 2025 and introduced spending restraints estimated to reduce budget deficits by $1.5 trillion over the next decade, as projected by the Congressional Budget Office.
The intersection of this colossal debt, the ongoing debate over government funding, and the looming possibility of a shutdown paints a complex and concerning picture for the nation’s fiscal health.
As policymakers grapple with these challenges, the economic well-being of the nation and its future generations hangs in the balance.