United States Debt Reach Historic $20 Trillion Mark After Debt Ceiling Suspension
According to the US Debt Clock, the national debt is now an astounding $20.16 trillion dollars after the White House gave the Treasury the go ahead to borrow more money, TeleSUR reported.
The borrowing limit was approved by an 80-17 Senate vote last Thursday. The House of Representatives also passed it by 316-90. Both votes would have overridden any veto by US President Donald Trump had he tried to block the legislation.
But, on Friday, Trump signed a law to suspend the debt ceiling until December 8, allowing the Treasury to freely borrow within that window.
The country’s debt has increased by about $215 billion ($62,000 per person and over $167,000 per taxpayer) since the president’s inauguration.
Former European Union consultant, president of the Global Policy Institute and professor of international affairs and economics at BAU International University in Washington, DC, Paolo von Shirach, told Sputnik that he expects the US national debt to continue to rise until structural reforms in government and finance are put in place.
“At the moment, there is absolutely no sign that either the Trump administration or the Congress want to seriously overhaul the entitlement programs that are the root cause of this systemic fiscal imbalance,” Schirach said.
The US Treasury has been banned from borrowing since March.
“There is no path forward to sustained US global leadership unless the negative social spending/deficit/debt spiral is finally reversed,” Schirach added. The economist further explained that the federal government’s spending habits drive the deficit “because of the trend line: Every year Washington spends more than it takes in term of tax revenue and the difference is financed by issuing new debt.”
Major portions of the budget go to healthcare, social security, and defense.
“The deficits are structural. As a consequence, we keep adding to the national debt, year after year,” Schirach said. “The deficits and hence the national debt are caused by the inability to finance major entitlement programs through tax revenue.”
The Congressional Budget Office (CBO) said federal debt held by the public is now at its highest level since World War II.
“Getting into debt in order to finance major infrastructure spending, or better education systems would be good. This would be an investment,” he said. “But America is getting deeper into debt in order to support the standard of living of retirees. This is socially valuable but economically not productive.”
If current laws stand, expanding the budget deficits will increase that debt sharply in the next 30 years to nearly 150 percent of GDP by 2047.
According to the agency, mounting debt increases government interest costs, puts additional pressure on the budget, and improves the chances of a fiscal crisis.
In total, the American debt, the combination of government, business, mortgage, and consumer debt, is fast approaching $68 trillion.
“Can this large economy sustain this level of debt? For the moment, the answer is ‘yes.’ The US still has good credit. Investors are willing to lend money to Uncle Sam. But this is not the real problem,” Schirach said.
“A government, little by little, discovers that it can do less and less because it has no longer any discretionary cash,” according to Schirach.