Recently, the total U.S. debt surpassed $36 trillion, setting a record high. This figure not only highlights the unsustainable nature of American deficit fiscal policies but also raises concerns about when the U.S. will face a debt crisis.
The "Debt Ceiling" Becomes the Focus of a New Political Controversy
The U.S. "debt ceiling" mechanism acts as the congressional authorization of a "credit card limit" for the federal government. When the limit is reached, the government must get congressional approval to raise or suspend it to avoid defaulting on its debt. Over the years, however, this mechanism has increasingly become a tool for partisan strife, leading to frequent fiscal stalemates.
Last year, the U.S. debt level nearly hit its ceiling. After months of intense negotiations, Congress temporarily agreed in June to suspend the debt ceiling until January 2025. However, this suspension period will end in early January next year, and the new Congress will then have to face the challenge of raising the debt ceiling once again.
Unlike previous years, the Republican Party won control of both the White House and Congress in this year's election, which might avert extreme conflicts over the debt ceiling between the two parties. But even if the debt ceiling is successfully raised, it will only temporarily ease the debt crisis. The U.S. Treasury Department predicts the so-called "X-Date" (when funds are exhausted) might arrive in the latter half of next year, potentially reigniting the debt crisis.
The Deficit Fiscal Dilemma Remains Unresolved, Experts Offer "Challenging Solutions"
American media points out that repeatedly raising the debt ceiling has not fundamentally solved the problem of uncontrolled debt, just "jumping from one pit to another." To bring the debt issue back under control, experts have proposed two pathways, but achieving them in the current U.S. political climate is nearly impossible.
- Promote Economic High Growth:
Sustained high economic growth can effectively reduce debt through increased tax revenue. However, forecasts indicate that the U.S.'s future economic growth rate will remain lower than the rate of national debt growth, making this goal difficult to achieve. - Increase Revenue and Reduce Spending:
Achieving a budget surplus by increasing revenue and cutting spending is another plan. Yet, for the U.S. government, which has long relied on deficit financing, this is nothing short of "a fantasy." Politicians from both parties are more inclined to cut taxes or increase spending to appease voters, rather than prioritize debt reduction.
Political Polarization Intensifies, U.S. Debt Dilemma Hard to Resolve
The current political landscape in the U.S. further hinders the resolution of the debt problem. With increasing partisan struggles, congressional discussions on fiscal policy are more focused on short-term electoral benefits rather than long-term economic stability.
In the future, even if the debt ceiling is raised again, the U.S. government is unlikely to avoid further borrowing, continuing forward from an even greater pile of debt. As Fox News commentary states, the U.S. debt issue has fallen into a vicious cycle, "even if short-term default is avoided, long-term fiscal instability remains difficult to resolve."
Debt Crisis Becomes a "Lurking Bomb"
Amid the Federal Reserve's continued interest rate hikes and the pressured prospects for the global economy, the U.S. debt problem is becoming a lurking economic bomb. Should the debt ceiling issue flare up again, it might lead to fluctuations in global financial markets, further undermining the global credibility of the dollar. How the U.S. government will address this crisis in the future will be a focal point of global attention.
