The gross national debt of the United States exceeded $33 trillion for the first time today. It’s a stark reminder of the country’s shaky fiscal record as Washington faces the prospect of a government shutdown this month amid a renewed fight over federal spending.
The Finance Ministry noted the milestone in its daily report on the country’s balance sheet. This came as Congress appears to be stalling in its efforts to fund the government before the September 30 deadline. Unless Congress passes a dozen budget bills or agrees to a short-term extension of federal funding at existing levels, the United States faces its first government shutdown since 2019.
The debt debate has grown louder this year, punctuated by an ongoing stalemate over raising the country’s borrowing limit.
That fight ended with a bipartisan agreement to suspend the debt limit for two years and cut federal spending by $1.5 trillion over a decade. It effectively froze some funds that had been forecast to increase next year and capped spending at 1% growth in 2025. But debt is expected to exceed $50 trillion by the end of the decade, even if recent spending cuts will be taken into account as interest on the debt rises and the cost of the country’s social security programs continues to rise.
But curbing the growth of public debt remains a challenge.
Some federal spending programs approved during the Biden administration are expected to be more expensive than expected. The Inflation Reduction Act of 2022 is estimated to cost about $400 billion over a decade, but the University of Pennsylvania’s Penn Wharton Budget Model estimates it could cost more than $1 trillion thanks to strong demand for the law’s generous clean energy tax US dollars cost credits.
Pandemic-era aid programs continue to cost the federal government money. The Internal Revenue Service reported last week that claims for the Employee Retention Credit, a tax break originally expected to cost about $55 billion, have so far cost the federal government $230 billion. The Treasury Department freezes the program due to fears of fraud and abuse.