![]() Bush in 20 and later made permanent in partial form by President Barack Obama. imposed tax cuts, including two measures signed by President George W. Rather than raise taxes to pay for those expenses, the U.S. Meanwhile the War on Terror, including wars in Iraq and Afghanistan, will ultimately cost the federal government more than $8 trillion, according to a study released by researchers at Brown University in 2021. In the wake of fiscal crises such as the 2008 financial crisis and the COVID-19 outbreak, the federal government spent trillions to stimulate economic growth and support people who had lost their jobs or faced other financial setbacks. The trend has resulted from a combination of tax cuts and spending increases overseen by both major parties, experts said. Last fiscal year, interest payments on the nation's debt amounted to $395.5 billion, or 6.8% of federal spending, according to the Office of Management and Budget. has spent more money than it has brought in, deepening the nation's financial hole. The last budget surplus for the federal government occurred in 2001. fiscal health but say the problem should not concern policymakers during lean economic periods. Some economists dismiss concerns about the rising debt as overblown, while others acknowledge that the debt threatens U.S. ![]() To be sure, experts differ over the risks posed by the nation's growing debt. "There are pretty big changes needed going forward." "The car is going off the cliff," Kent Smetters, a professor at the University of Pennsylvania's Wharton School of Business who formerly worked at the Congressional Budget Office, told ABC News. ![]() could still make significant but less transformative policy changes in an effort to achieve annual fiscal balance, in which the costs incurred by the government equal the amount of money it raises, allowing the country to stop adding to its debt, they added. would need to either impose a dramatic tax increase or spending cut, or a combination of the two, amounting to a monumental shift in U.S. In order to reverse that trend and achieve an annual surplus, the U.S. has accrued tens of trillions of dollars in debt, almost all of it in the last two decades under both Republican and Democratic presidents. Since yearly spending by the federal government exceeds tax revenue, the U.S. In a report last week, the nonpartisan Congressional Budget Office projected the federal debt will grow nearly $20 trillion by the end of 2033.Ī group of Republican lawmakers has indicated it would not raise the debt limit unless Democrats agree to significant spending cuts the Biden administration, however, has said it will not take part in policy negotiations conditioned upon the periodic borrowing hike. economy into disarray, drawing attention to a looming question: How has the nation's debt ballooned to $31.4 trillion and what can be done to shrink it? A divide in Congress over the debt ceiling threatens to plunge the U.S.
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