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National Debt Crisis: Why $34 Trillion is Just the Beginning

Economist Peter Morici explains what the national debt is, why it has ballooned to over $34 trillion, and its potential implications on Americans. The debt level continues to increase rapidly despite growing criticism of excessive government spending. According to recent findings from the Congressional Budget Office (CBO), the federal debt will reach an astonishing $54 trillion in a decade due to aging populations and rising healthcare costs. Higher interest rates are also contributing to this problem, making it more expensive for the US to service its debts. Fitch Ratings downgraded America’s long-term credit score by one notch, snatching away its pristine AAA rating in exchange for an AA+ grade due to concerns about deteriorating finances and political divisions hindering addressing this issue. President Biden has defended his administration’s spending but the debt reduction figure he cited includes expiring COVID relief emergency measures’ savings while the country owes a trillion dollars more than it did before those policies were implemented, making him one of several presidents who have added to the national debt rather than reducing it. The higher the debt climbs, the more expensive interest payments become each year at the expense of vital public investments like education, research and development, infrastructure, etc., which could hinder economic growth in the future as well as fuel inflation pressures through an increased cost base for firms borrowing money to finance their operations or invest. According to a recent Pew Research Center survey published earlier this month, 57% of Americans think reducing budget deficits should be among President Biden and Congress’ top priorities compared with just 45% last year.

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