The United States has hit a new milestone in its financial history, with the national debt soaring past $35 trillion for the first time ever.
This alarming increase has been observed under the administration of President Joe Biden, with the debt swelling by over $7 trillion since his inauguration. To put this into perspective, if this colossal debt were to be divided among the approximately 258.3 million adults in the U.S., each individual would be burdened with around $135,500.
According to Conservative Daily News, Peter C. Earle, a senior economist at the American Institute for Economic Research, offered his insights on this issue. He drew a parallel between the U.S. government's debt accumulation and the old saying about bankruptcy: "The way in which the United States government was able to become so cripplingly indebted reminds of the old adage about how one goes bankrupt: at first very slowly, and then very quickly." Earle pointed out that the U.S. government has gradually assumed numerous roles, many of which are significantly beyond the scope of the U.S. Constitution. As the federal government's influence in the lives of everyday citizens and on the global stage has expanded, the costs have skyrocketed, far exceeding what taxes can cover.
Earle further explained the political dynamics that contribute to this financial predicament. He said, "Politics in democratic states tend, over time, to embrace high time preference behaviors: spend now and worry about the consequences later." He noted that there is little incentive for politicians on either side of the aisle to live within their means. As U.S. citizens and foreign powers have become increasingly dependent on U.S. government spending, demands for more programs and services have risen, leading to a towering debt that continues to grow.
Several initiatives under the Biden administration, such as the American Rescue Plan and the Inflation Reduction Act, have contributed to the ballooning federal deficit. These acts authorized trillions in spending, further exacerbating the debt situation. Earle criticized the government's approach, stating, "Politicians spend taxpayer dollars and encourage lofty borrowing to satisfy their constituencies, whether those are activists, corporations, foreign powers, or other interest groups." He warned that the crushing weight of debt will eventually come down, and those in power will have to answer for it.
President Biden's stance on student loan debt forgiveness has also played a role in the rising national debt. So far, his administration has forgiven $168.5 billion across 4.76 million student loan borrowers, according to the Department of Education. Most recently, another $1.2 billion was forgiven, benefiting 35,000 borrowers.
Earle warned of the potential consequences of this debt situation, stating, "In any scenario other than its resolution by payment in full and the satisfaction of the borrowing terms, there are a handful of likely outcomes: much higher interest rates on US debt, much higher taxes, slower growth, and quite possibly rising inflation."
It's worth noting that the national debt also increased by $8 trillion during former President Donald Trumps administration, with nearly half of the debt added through the CARES Act and other COVID-19 relief.
Jeremy Edwards, a White House Spokesperson, defended the Biden administration's financial management, stating, "After the last administration increased the debt by a record $8 trillion and didnt sign a single law to reduce the deficit, President Biden has signed $1 trillion of deficit reduction into law." He accused Congressional Republicans of wanting to inflate the debt with more tax cuts, while proposing to cut Social Security, Medicare, and the Affordable Care Act. Edwards claimed that President Bidens budget would lower the deficit by $3 trillion by making billionaires and the biggest corporations pay their fair share and cutting spending on special interests.
As the U.S. grapples with this unprecedented debt, the question remains: how will the government address this issue while ensuring the welfare of its citizens and maintaining its global standing? The answer to this question will have significant implications for the nation's economic future.
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