The hits keep on coming. After millions of job losses and loss of income and huge death tolls, the pandemic recession has put the United States in a position it has not seen since World War II. The size of the United States debt has grown almost as large as the USA economy and is set to be more than the economy within the next year. Federal debt, as a share of the economy, is now on track to smash America’s World War II-era record by 2023.
This level of debt was only forecasted to happen at the end of the decade. However, COVID-19 and it's associated effects have brought it much closer than economists would have imagined.
“We should think and worry about the deficit an awful lot, and we should proceed to make it larger,” said Maya MacGuineas, the president of the Committee for a Responsible Federal Budget in Washington, which has for years pushed lawmakers to take steps to reduce deficits and debt.
Tax cuts in 2017 totaling over $1.5 trillion were expected to pay for themselves but have only added to the debt stock.
The Coronavirus pandemic has forced the economy to contract to levels not seen in 75 years.
Now with people out of jobs and businesses failing, the president has been forced to approve more than $3 trillion in new federal spending to help businesses and individuals stay afloat.
https://www.nytimes.com/2020/09/02/business/us-federal-debt.html
5 comments:
If we were supposed to reach these levels by the end of decade, it makes me wonder what crazy levels we may be at at the end of the decade now due to COVID. Unfortunately, I believe it is going to be near impossible these next couple of years to implement any sort of contractionary policy to reduce debt while keeping everyone afloat during the pandemic. Even if we do get a vaccine relatively soon, it still will take a long time to get everything back to normal. I wonder if we may start advertising bonds like we did during WWII to try and help reduce debt.
To piggyback on what you said Maia, I think that the levels of debt will be incredibly high by the end of the decade and possibly even stall economic growth. These levels are already excessive right now and though a vaccine might bring us back to a sense of normalcy,we can't tell if it will be the same for economic figures such as GDP and employment levels. Also, this might to lead to cuts in spending and an increase on taxes. There are so many different things that could happen, the government will need to take drastic measures to help the economy stay afloat.
like you said mala, if we where supposed to hit these numbers by the end of the decade how much will covid impacted these numbers.The worst part about it all is that even if we go back to normal we don't know if what we where doing before covid will be good enough to combat the debt. one thing for sure we will need to take major precautions to help fight off the debt it is definitely time for more extreme policies.
It is crazy to see everything that COVID really affects. This pandemic has rapidly increased many things since its start and I am cautious to see where we are when the virus is all said and done. I do think that the debt is something that needs our attention, but we are so divided that a solution cannot be agreed on. After WW2 our country was willing to pay almost all of their income in taxes to pay for the war debt as nationalism was at its highest. Today, I couldn't think of a single person that would be willing to make this sacrifice as we are in a low nationalist time.
I agree with what Cole said. The US has been in deficit spending mode since President Bush's time. The last time we had an actual surplus was during President Clinton's second term. Since then the debt has continued to increase and reached new highs due to the pandemic. The only reason US was able to reduce its debt after WW2 was due to, as Cole has mentioned, nationalism. Today, the country is extremely divided and we have people who believe COVID does not exist, while others believe it does. The economic policies put in place now will affect the situation of US economy for the coming years.
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