Debt Increased $1T Since Deal Signed
Five weeks after Speaker Kevin McCarthy and President Joe Biden signed a deal to eliminate the ceiling on debt, the U.S. national debt increased $1 trillion, according to Treasury statements reported by Fox News.
On June 3, Biden signed the bipartisan debt ceiling deal into law. The compromise suspended the debt ceiling through January 2025 in exchange for keeping non-defense spending relatively flat in FY 2024 and setting a cap of 1% in spending increases for FY 2025.
It will also protect veterans’ health care benefits, temporarily broaden work requirements for certain adults receiving food assistance benefits, claw back some Covid-19 relief funds, cut funding for the Internal Revenue Service, restart student loan repayments, maintain climate measures, and expedite a natural gas pipeline in West Virginia.
Despite what seemed to be a reasonable deal, total federal debt soared from $31.47 trillion before the deal was passed on June 2nd to $32.47 trillion on July 6.
Even with the bipartisan deal in place, deficits are still expected to exceed $1 trillion per year, with the 2023 deficit expected to total $1.5 trillion, according to Fox News. Goldman Sachs economists estimate the deal will reduce the national debt by 0.2% of GDP per year over the next two years.
While the deal was necessary to avoid a catastrophic default, it did not seriously address the litany of spending problems our country faces. Real reforms and meaningful spending cuts are still desperately needed to balance the budget, and federal officials must continue to negotiate over ways to rein in spending.
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