The COVID-19 pandemic forced the United States to take unprecedented steps to stimulate the economy and keep the country afloat as businesses closed or drastically reduced operations. All of that spending increased the national debt, which means that the interest owed on it will also increase in the coming years.
In a July 2021 report, the Congressional Budget Office released a report that took into account how the $1.9 trillion American Rescue Plan will impact the national debt. The organization estimates that the federal budget deficit will reach $3 trillion by the end of this fiscal year and the federal debt will reach 103% of GDP — both troubling signs for the economy’s long-term health.
The CBO report also shows that interest on the national debt will triple from $331 billion in 2021 to $910 billion in 2031. This number can be difficult to get your mind around because it’s so large, but the Peter G. Petersen Foundation estimates it will work out to about $2,600 per household.
Even before COVID-19 disrupted the economy, the national debt was already on its way to being unsustainable thanks to increased spending on healthcare, Social Security, and other programs without a corresponding increase in revenue.
The Petersen Foundation projects that healthcare costs will continue to rise as the country’s population becomes older and more dependent on government-funded services like Medicare. Social Security could also become unsustainable if the amount of young workers paying taxes does not keep pace with the number of older Americans collecting payments from the system.
The infrastructure plan currently being debated in Congress will also increase the national debt. The Petersen foundation notes that the $5.4 trillion we are projected to spend on interest over the next decade vastly far outpaces the cost of the Biden Administration’s infrastructure package at $2.6 trillion or the bipartisan infrastructure bill in Congress at $579 billion. No matter which bill ultimately ends up passing, the national debt will continue to grow.
Experts agree that some combination of legislative reform and personal responsibility will be necessary to reverse the troubling trends when it comes to the national debt. Writing for the Heritage Foundation, Rachel Greszler and David Ditch describe the situation as an Olympic-sized problem, but one that America can overcome with the hard work and dedication of Olympic athletes.
“A cornerstone of success for Olympians is personal responsibility. Years of consistent training, healthy food and vigorous exercise combine to give athletes the physical and mental tools they need to rise to the top,” Greszler and Ditch write. “A similar mindset can work for the nation’s financial woes. Top athletes avoid junk food. Congress should cut out wasteful spending such as corporate welfare and excessive compensation for federal bureaucrats.”
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