Home Society All hands on deck: US debt becomes too expensive to maintain

All hands on deck: US debt becomes too expensive to maintain

The United States economy is one of the current major topics of conversation. It is not very common, but governments can actually go bankrupt. The US national debt is enormous, but at the same time, interest rates are also very high. The US Congressional Budget Office (CBO) believes that in the first two weeks of June, the US will no longer be able to pay its debts.

In a report, the Congressional Budget Office (CBO) states that it will have a deficit of around $1.5 trillion ($1,500 billion) for 2023. This is $0.1 trillion more than it expected earlier this year. Unfortunately, it not only has a shortage of money, but it is also approaching the debt ceiling. This is a limit set by the US Congress on how much debt the federal government can accumulate. It is controversial to raise this level because the debt is part of the public sector.

The government agency believes that if the debt ceiling is not raised, there is a significant chance that by June, it will no longer be able to pay its own national debt. This would mean that the Department of the Treasury would not be able to refinance the debt.

Refinancing is currently becoming more expensive due to the Federal Reserve raising interest rates sharply. The debt has thus become much more costly. The CBO hopes for some breathing room by 2024, as there is an expected increase in revenues for next year.

Unfortunately, the CBO believes that the portion of the debt held by the US government itself will not decrease in the coming years. This portion would be 98% of the US Gross Domestic Product (GDP) by the end of 2023, and it is projected to reach 119% by 2033. That would be the highest level of US national debt ever recorded. However, it is relatively moderate compared to other countries. For example, in Italy, this ratio is 135.5%, and in Japan, it is even 237.1%.

About the author: Christy Olsen

Christy Olsen, a young author who followed in her father's footsteps and took up journalism at school. She often introduces a lot of subjective things into his texts, always tries to state the essence and give a proper assessment.

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