The U.S. government learned last week that it may have reached an unfortunate milestone: The size of its debt surpassed the nation’s total economic output.
It was a striking imbalance, according to early estimates, one that the country has experienced only in rare circumstances — briefly during the pandemic, and in the aftermath of World War II. But the development barely seemed to register in the nation’s capital, where few policymakers bothered to acknowledge the latest warning sign about the government’s poor fiscal health.
The root of the problem is well-documented and widely known. U.S. debt has soared in recent years because of a mismatch between federal spending and tax revenue, one complicated by a rapidly aging population, which has driven up costs across government.
For economists, the fear is that these conditions are inching the United States toward a fiscal crisis, one in which its debt is so great that the country can’t easily afford to pay the rising interest on it. But their warnings have long gone unheeded in Washington, calcifying the strains on the government’s balance sheet in ways that President Trump’s agenda is expected to exacerbate.
Despite winning a congressional majority, Republicans have cut little in spending over the past year. With the few savings they did achieve, they put that money toward offsetting a fraction of the cost of Mr. Trump’s tax cuts, which are still expected to add more than $4 trillion to the debt in the coming years.
Those fiscal risks aren’t yet fully realized in the total federal debt held by the public, which topped about $31.26 trillion in March, federal records show. By comparison, the nation’s nominal gross domestic product, a measure of its output using current dollars, reached $31.21 trillion in the 12-month period ending in March, according to data released last Thursday and analyzed by the Committee for a Responsible Federal Budget, which supports deficit reduction.
As a result, the ratio of debt to G.D.P. — a widely regarded metric for assessing the government’s fiscal health — slightly exceeded 100 percent in the committee’s calculations. That last occurred for a short period in 2020, as the pandemic clobbered the economy and government shelled out trillions in emergency relief, the group found.
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Conservatives: The world's fiscally responsible politicians 😂
ReplyDeleteDebt and deficit hawkers use sleight of hand to make their voters feel they’re being responsible focusing on spending while pretending tax cuts for the good people (themselves) aren’t as bad or worse for debt and deficits (“tax cuts pay for themselves!”). They get to claim they built it themselves by hiding the government subsidies supporting their success and pushing off the reckoning that will come - justifying what will come by pointing to their (faux, secularized Calvinist) virtues of hard work and thrift while the poor brought it on themselves. It’s a scam and it’s a sin, and it always has been.
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