What Is Pushing the National Debt to Its Limit?

Impending need to raise the debt ceiling is renewing debate over federal taxes and spending

U.S. debt held by the public as a share of gross domestic product

My cmnt: The spending and borrowing and printing of money by the O’Biden regime is unconscionable. The democrats created the problem (shutting down the country, schools, businesses) and then “fixed” the problem as usual by throwing taxpayer money (from our children and grandchildren) at it. Biden sent out checks indiscriminately to every man, woman and child (and illegal aliens) in the country. This was to buy votes. And per usual the democrat fix is worse than the problem

By James Benedict and Anthony DeBarros

Updated Feb. 15, 2023 2:08 pm ET – for The Wall Street Journal

The U.S. national debt has increased by more than $8 trillion dollars since late January 2020, pushing the total debt over $31 trillion, according to the Treasury Department. Extraordinary measures to keep paying the government’s bills could run out before July, according to new figures from the Congressional Budget Office released Wednesday.

When federal government spending exceeds revenue, creating a budget deficit, the U.S. covers the gap by selling securities, such as Treasury bonds. The national debt is the accumulation of all past deficits plus the interest owed on the resulting debt. Measuring the debt as a share of gross domestic product allows for comparing the level of debt over time relative to the size of the U.S. economy and for comparisons with other countries’ debt-to-GDP ratios.

The federal debt held by the public, not including intragovernmental holdings, reached 100.3% of GDP in 2020, the result of a multi-trillion dollar fiscal response to the coronavirus pandemic and a sharp drop in economic output. Economic downturns often expand the deficit on two fronts—the government spends more on social programs and financial stabilization, and a cooling economy lowers tax revenue even if the rates haven’t changed.

The U.S. has run annual deficits for most of its history—it incurred $75 million in debt from the Revolutionary War—and it hasn’t paid down all of its debt since 1835. The last time the nation brought in more money than it spent was 2001.

Note: Not seasonally adjusted. Data after 2021 are projections. Source: Office of Management and Budget

In the 1990s, government receipts grew faster than spending, the effect of tax increases and expenses being held in check by a reduction in military spending and passage of the Balanced Budget Act of 1997. But following the terrorist attacks of Sept. 11, 2001, the government cut taxes and increased spending, creating an annual budget deficit again by 2002.

During the 2008 financial crisis, the government spent about $1.8 trillion on fiscal stimulus and economic support to stabilize the banking system. Meanwhile, between fiscal years 2007 and 2009, a weak economy caused receipts to fall 18%, with the government also cutting taxes in 2017. The overall debt more than doubled between 2007 and 2018.

The government spent nearly $3.6 trillion in response to the Covid-19 pandemic, both on social safety programs and financial stabilization. Unlike during the 2008 financial crisis, tax revenue rose, bolstered by a strong stock market. However, expenses eclipsed those gains.

Opportunities to trim costs are limited, with only about one-third of federal spending labeled as discretionary, requiring congressional approval through annual appropriations bills. The rest is mandatory spending and includes entitlements such as Medicare, Medicaid and Social Security. 

Social Security was projected to account for 22% of spending in 2023 and together with Medicare would make up 38% of spending. The Social Security figure is expected to grow to 24% in 2028 as an aging population pushes up the costs of both programs. National defense accounts for 13% of spending in 2023 and is the largest non-entitlement program. The CBO also expects that net interest will account for 13% of spending by 2028, up from 10% in 2023.

Write to James Benedict at james.benedict@wsj.com and Anthony DeBarros at anthony.debarros@wsj.com

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