ASSESSMENTS

The U.S.'s Growing Debt Burden Portends More Gridlock on Budget Policy

Jun 5, 2023 | 20:21 GMT

U.S. President Joe Biden (right) meets with U.S. House Speaker Kevin McCarthy to discuss the debt ceiling in the Oval Office of the White House on May 22, 2023.

U.S. President Joe Biden (right) meets with U.S. House Speaker Kevin McCarthy to discuss the debt ceiling in the Oval Office of the White House on May 22, 2023.

(SAUL LOEB/AFP via Getty Images)

In the United States, continued large fiscal deficits will significantly increase government debt levels in the coming decades. This, exacerbated by partisan polarization, will translate into intensified conflicts in Congress over how to cut spending and generate more revenue, which in turn will increase the political and economic challenges of preserving debt sustainability. While U.S. lawmakers just raised the debt ceiling and avoided a potential default, the politics surrounding budget policy and policymaking will remain contentious due to both economic and political reasons. U.S. President Joe Biden's expenditure increases and his predecessor's tax cuts have further raised the debt-to-GDP ratio in recent years. While the post-COVID economic recovery and the recent bout of inflation may have temporarily reduced that ratio, it is still set to substantially increase in the medium term....

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