Announcement by the U.S. Treasury… It’s only been 3 months since it surpassed $33 trillion
Causes of increased debt and interest rate hikes after COVID-19
Foreign media reported on the 2nd (local time) that the U.S. federal government’s debt has increased and exceeded $34 trillion (about 4 trillion won) for the first time in history.
According to foreign media such as the Associated Press and the New York Times (NYT), the U.S. Treasury Department announced this in a report released on this day. It has been three months since it exceeded $33 trillion at the end of September this year, affected by a decrease in tax revenues and an increase in fiscal deficit due to increased federal spending.
This exceeded $34 trillion faster than expected. The Congressional Budget Office predicted in January 2020 that the total federal debt would exceed $34 trillion in fiscal year 2029.
The U.S. federal government’s debt has increased sharply through the COVID-19 pandemic. The Associated Press explained that the U.S. government borrowed a lot of money to support economic stability and recovery through the Donald Trump and Joe Biden administrations, and with the increase in the base interest rate, the government had to bear more costs to repay the debt. .
The Congressional Budget Office predicted that U.S. federal government debt, which is about 97% of gross domestic product (GDP) as of the end of 2022, will increase to 181% by the end of 2053.
“Looking ahead, debt will continue to surge, with the Treasury expected to lend nearly $1 trillion more by the end of March,” said Michael Peterson, CEO of the Peterson Foundation.
The Associated Press said that the federal government’s debt could endanger major tasks such as national security, social security, and Medicare for decades to come, and pointed out that the confrontation between the U.S. White House and Congress over increasing the debt limit is also a risk factor.
Shai Akabas, director of economic policy at the Bipartisan Policy Center, a think tank, said there could be a serious situation related to the impact of the federal government’s debt increase, saying, “It could be a surge in interest rates, or it could be a recession leading to increased unemployment.” .
Previously, credit rating agency Moody’s lowered the US credit rating outlook from ‘stable’ to ‘negative’ in November last year, citing the US national debt problem. U.S. Treasury Secretary Janet Yellen said she disagreed with Moody’s decision but acknowledged that current economic conditions could make federal debt unsustainable.
The U.S. Congress will begin negotiations on the 2024 fiscal year budget next week. Last September, the U.S. Congress was unable to agree on a budget by the deadline, so it prepared two temporary budget plans and avoided a federal government shutdown (temporary business suspension).
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.