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What Happens After That?
2022-02-02

            According to the U.S. Treasury Department, for the first time in history America's national debt has surpassed $30 trillion.  It is a figure we weren't supposed to reach until 2025.

            It has expanded by about $7 trillion since January 2020 as the government dispersed stimulus payments and took other measures to support the economy.

            In case you're wondering, $30 trillion debt is the equivalent of $231,000 per household and $90,000 per person.  If each U.S. household paid $1,000 per month toward covering the debt, it would take 19 years to pay down the sum.

            Ouch!

            More than $7.7 trillion is owed to foreign creditors, with China, Japan and the United Kingdom being owed the most.

            The amount also includes intragovernmental debt, or money the federal government owes to itself, like Social Security trust funds. It also includes debt held by public entities such as businesses, pension plans and insurance companies.

            Now business and government leaders are trying to figure out whether the increasing debt could cause an already punishing inflation rate to spiral out of control.  Something none of us want.

            A spokesman for the Peter G. Peterson Foundation, an organization dedicated to fiscal responsibility, described the debt milestone as a "giant red flag for all of us about America's future economic health, generational equity, and role in the world."  They warned that the high and rising debt makes us less prepared for the next pandemic, less secure against future adversaries, less resilient to the changing climate, and less able to build the strong and inclusive economy that we all want for the next generation'

            The staggering debt and the possibility that it would cripple the country over the long term was a major concern of Sen. Joe Manchin (D-WV) when he made his decision to oppose the Build Back Better legislation.

            Last year, Republicans blocked efforts to lift the debt ceiling for months, citing concerns that raising the federal borrowing limit would facilitate additional government spending the country could ill afford.

            When the government has a deficit, most of the deficit spending is covered by the government taking on new debt.  Kind of like a person using a credit card for a purchase and not paying the full credit card balance each month.  If you continue to buy more on the credit card and continue to payback less, your debt grows, and grows, and grows.

            Congress eventually reached an agreement last year to raise the debt ceiling by $2.5 trillion which is expected to cover our obligations through 2023.

            What happens after that?


 

 

 

 

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