If you know anything about our federal finances, it’s probably that the United States is grossly in debt. And by grossly, I mean we owe debtors a stupid amount of money that some say we can never really pay off. So how much is it up to now?
Well, according to the most recent data released by the Treasury Department, U.S. national debt is nearly $31 trillion.
The $30.9 trillion total comprises roughly $24.3 trillion in public debts and $6.6 trillion in intragovernmental holdings. The latter includes things like federal trust funds and other accounts.
As you know, these numbers have steadily been climbing over the years, finally hitting a milestone of $30 trillion in February of 2022.
But what does such a high national debt really mean? Furthermore, what does it mean for you and me?
Well, to answer the first, the Treasury Department notes that our national debt is an “accumulation” of borrowing money the federal government obtained by selling marketable securities to pay off its debts and “associated interest owed to the investors who purchased these securities.”
Naturally, the debt wouldn’t occur if the government could recuperate or collect more money than it spends in a single year. Clearly, that’s not happening, though.
And according to the Congressional Budget Office or CBO, it’s not likely to happen for some time, given current spending policies and such of our federal government.
That leads us to what high national debt means for the U.S. economy and so its citizens.
Per the CBO, high debt, particularly rising or expected to grow as a percentage of the gross domestic product or GDP, also raises a number of other things. This means that “borrowing costs throughout the economy” would increase, private investment would decrease, and the economic output would slow over time.
Additionally, interest costs related to the debt would be forced upward, which leads to an increase in “interest payments to foreign holders of the US debt, decreasing the nation’s net international income.”
Basically, none of it is good.
It is also noted that as the debt rises, the nation’s borrowing power decreases as investors begin to lose confidence in the government’s ability to pay off what they owe. I mean, it only makes sense, right? Why loan out huge sums of money to a nation that year after year only increases their debts rather than paying them off?
And those that would be willing to become involved in such a risk would require much higher than average interest rates.
But the government has to make up that money somewhere, right? So what does that mean?
Well, to put it rather simply, it means higher taxes and a continued rise in inflation. The confidence and value of the US dollar will continue to erode. And as the CBO notes, policy choices in Congress could even be affected.
Of course, this shouldn’t be a real shock to anyone. Neither should it be astonishing that Democratic President Joe Biden and his cronies don’t seem to have any real interest in either absolving the national debt or lowering current spending practices.
If anything, Biden is increasing them. I mean, his Inflation Reduction Act? Firstly, the bill does little, if anything, to reduce inflation. Secondly, it will cost the US government $485 billion to just enact.
Then, there is Biden’s new student debt forgiveness plan. Yeah, I know, it’s rather ironic that a country up to its ears in debt forgives the debt of students everywhere. This costs the government money too. And, as many experts have estimated, it will only raise taxes and borrowing interest rates for citizens.
Besides, it’s not like inflation isn’t already high.
Sure, over the past two months, we’ve seen some relief on that front, for which Biden is taking full credit. Gas prices have gone back down some. But it’s one of the few things that have.
Most other consumer prices are still rising. You know, things like rent, food, energy costs, etc. Basically, all the essentials a family needs to survive and eke out a living are growing in price by the day.
But apparently, that’s no concern to our commander in chief, just as the national debt isn’t.