What Is Happening to the US National Debt?

Understanding the US national debt ceiling is crucial as it’s been a hot topic in the media lately. The US national debt refers to the total amount of debt owed by the US government, including Treasury securities owned by external entities and issued by the US Department of the Treasury. 

Why is 2023 the record year of the national debt?

The United States has been relying on borrowing funds to cover public expenses and revenue shortfalls since the First World War.

According to a report from The New York Times, the US Treasury Department has announced that the national debt of the United States has now passed the $30 trillion mark. It is an all-time high for the US economy. 

The department has attributed this to the measures taken by the government to address the impact of the coronavirus pandemic. The measures included providing financial support to small businesses and utilizing $5 trillion for stimulus payments. 

In response, the US Treasury Secretary has requested Congress to approve a law to raise the national debt ceiling to minimize the risk of defaulting on its financial obligations. This decision enables the government to obtain loans and fund its expenses. 

Janet Yellen, the Treasury Secretary, has warned that reaching the debt ceiling would have significant negative consequences for the US economy and global financial stability.

What are the potential consequences?

The implications of the national debt on the economy are complex and debated among economists. Some potential consequences include reduced economic growth due to increased interest payments on the debt, decreased foreign investment in the US economy, and increased inflation due to potential monetary policy changes.

The US government must manage its debt responsibly and avoid surpassing the national debt ceiling. Doing so would prevent a potential financial shortfall that could make it impossible to cover the cost of government purchases or pay federal salaries. 

If the US defaults on its debt obligations, it could significantly impact the US economy and global financial markets. Thus, it’s important to take measures to ensure the national debt ceiling is not exceeded.

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