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The U.S. national debt exceeds $30 trillion for the first time in U.S. history, equivalent to 130% of GDP. During the pandemic, the national debt rose by more than $7 trillion. U.S. liabilities include both federal and state government debt.
Within the government spending, there were three stimulus plans to contain the effects of the pandemic. The first, for $1 trillion led by former President Donald Trump, a next $900 billion plan introduced by Congress, and a final $1.2 trillion stimulus plan by the Biden administration.
The debt spike comes just as the U.S. begins to implement tighter fiscal and monetary policy. Several of the emergency pandemic programs have expired and the Federal Reserve (Fed) plans to raise interest rates in mid-March in an effort to contain U.S. inflation, which reached 7% in 2021.
As of October last year, the federal debt was $28.5 trillion. Between the end of the fiscal year and the present, the national debt has grown by $1.5 trillion. For the fiscal year 2022, the Biden administration includes a deficit of $1.84 trillion.
At the end of the fiscal year 2020, the national debt equaled $26.9 trillion. The Trump administration added $6.7 billion to the public debt, mainly due to measures taken because of the coronavirus emergency, but also because of tax cuts during his administration. During the first year of the Biden administration, $3.1 billion in additional spending has been added to offset the economic impacts of the pandemic.
How did the national debt expand?
Although it is difficult to measure the increase in each administration’s debt, as they are in part responding to spending and fiscal commitments of past administrations, since the Bush presidential administrations have incurred deficits in excess of $1 trillion, breaking records, so far, with the Obama administration, which contributed $8.6 trillion to the national debt.
Percentage-wise, the administrations that have increased the debt the most were those of Franklin D. Roosevelt and Woodrow Wilson—both dealt with a world war, and the former led the largest expansion of the Federal Government with the New Deal after the Great Depression. Roosevelt increased the size of the debt by 1,048%, while Wilson increased it by 723%.
Third place goes to Ronald Reagan who expanded the national debt by 186%, in part because of tax cuts during his administration, as well as a massive expansion in the defense budget during the end of the Cold War, which grew by 35%.
Interest payments on the national debt will cost Americans more and more money
In its latest projection, the Congressional Budget Office (CBO) estimates that the national debt will increase to $35.8 trillion by 2031. The Committee for a Responsible Federal Budget estimates that the amount will be $36.8 trillion.
Over the next 10 years, with no change in current spending policies, CBO estimates that interest on the debt will become the fastest-growing component of the federal budget. By 2031, interest costs would account for 12% percent of the entire federal budget.
CBO expects interest payment costs to triple by 2031, from $331 billion to more than $910 billion. The 2021 interest payment involved, on average, tax collections of $2,600 per U.S. household.
Economist, writer and liberal. With a focus on finance, the war on drugs, history, and geopolitics // Economista, escritor y liberal. Con enfoque en finanzas, guerra contra las drogas, historia y geopolítica