U.S. Debt Climbs To $33 Trillion As Government Shutdown Looms
As the US national debt surpasses $33 trillion and a government shutdown looms, Wall Street is on the defensive.
The gross national debt has grown by $1 trillion in the last three months alone.
This shutdown could sour sentiment and deal a blow to an economy already grappling with high gas prices, autoworker strikes, and elevated inflation — with some even suggesting it could increase the possibility of a recession.
Fitch sent Congress a wake-up call after the debt limit fight earlier this summer.
The ratings agency downgraded US sovereign debt from AAA to AA+ in August, citing mounting debt and partisan brinkmanship as the reasons behind its decision, Nicole Goodkind reported for CNN.
The gross national debt has grown by $1 trillion in the last three months alone. Political finger-pointing about the causes of the debt accrual has left the government at an impasse over the budget.
Republicans argue that federal spending programs championed by the Biden administration are too expensive, while Democrats contend that GOP-backed tax cuts have reduced revenue.
The budget deficit — the difference between what the government spends and what it earns — reached $1.5 trillion for the first 11 months of the year, representing a 61% increase compared to last year.
Higher interest rates have made it more expensive for the government to repay its debt.
A shuttered government with no plan for how to reduce its debt would exacerbate the problem.
"As we have seen with recent growth in inflation and interest rates, the cost of debt can increase suddenly and rapidly," said Michael Peterson, CEO of the Peter G. Peterson Foundation, which advocates for fiscal responsibility.
"With more than $10 trillion in interest costs over the next decade, this compounding fiscal cycle will only continue to harm our children and grandchildren," he added.