9/12/2023 0 Comments National debt clock![]() ![]() "It's important to note that the reason the budget was already on an unsustainable track before the pandemic hit was not because of waste, fraud or Congress spending like drunken sailors," Bixby said. Right now the deficits are an important medicine for the illness that the nation has, but you just don't want to plan a long-term policy around it."īixby also noted that even before the pandemic hit, the debt was rising relative to the size of the economy despite a robust economic recovery from the Great Recession. "I would use another analogy, which is when you're sick, you take medicine, when you recover you stop taking the medicine. "You have to distinguish between the short-term spike in the deficits, which is responsible in an emergency, and the long-term trend of debt, which would ultimately be ruinous for the economy," Bixby said. If interest rates were to rise significantly, we would face much bigger long-term fiscal burdens."īixby added that the surging national debt in the pandemic could be viewed as a benefit in the "very, very short term." "The low interest rates are doing a lot of the work in keeping the fiscal situation sane. "We’re in very unusual times with the high debt, but extremely low interest rates," he added. While the overall ramifications of low interest rates on the economy at large can get complicated, Gale noted, "it may or may not be good news for the economy, but it's good for the budget." Moreover, interest rates amid the pandemic are currently very low. "I want to be clear we needed that spending and those tax cuts, because the various shutdown and work-from-home orders required people to detach from the economy, so we needed a government boost to offset that," he said. "One way people try to get a more realistic understanding of it is to scale it relative to GDP." "People have no way of understanding what that means when you get to the 'umpteenth trillion dollars,'" Gale added. Largely due to the pandemic, in just Fiscal Year 2020, the CBO forecasts a deficit of $3.3 trillion - more than triple the shortfall in 2019 - and the largest deficit as a percent of GDP since 1945. ![]() The budget deficit is the annual difference between government spending and revenue. ![]() The national debt accumulates as the government runs budget deficits year after year. "How much the government owes itself doesn't really have an effect on the economy, it's more of a bookkeeping issue." "It's the $20 trillion that economists worry about because that's the money that influences the credit market, that's how much the government owes," Bob Bixby, the executive director of the Concord Coalition, a nonpartisan fiscal responsibility advocacy group based in Washington, D.C., told ABC News. That gross national debt figure is broken up in two parts, with approximately $20.8 trillion of it being debt the public owes and approximately $5.8 trillion of it stemming from intergovernmental holdings such as Social Security trust funds or other cases where the government essentially owes itself money. The unfathomably massive gross national debt currently tops $26.7 trillion, according to the Treasury Department. ![]()
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