Federal government keeps running after hitting $31.4 trillion debt ceiling

WASHINGTON (TND) — After some accounting maneuvers the federal government continues running after hitting the debt ceiling of $31.4 trillion.

Director of General Economics and Trade at the Cato Institute Scott Lincicome joined The National Desk’s Jan Jeffcoat Thursday morning to discuss the numbers.

This comes at a time when Congress is also looking at the debt ceiling. Since 1960 it has raised the debt ceiling 78 times, most recently back in 2021. They've suspended the debt limit seven times since 2013.

“There's good and bad consequences,” Lincicome said. “You know, the good news is that the government is able to issue more debt and finance existing legal obligations. So these are ones that previous Congresses and presidents have made that eliminates the risk of a default or having to prioritize certain debt payments or obligations that we would otherwise have to balance. The bad news, of course, is that it lets us keep spending.”

The gross federal debt is $31 trillion – 120% of GDP.

“Debt this high hurts growth,” Lincicome said. “It makes fiscal crises down the road more likely. And even worse, the debt outlook is deteriorating. We're going to be spending even more in the future. Debt is projected to hit 138% of GDP by 2032.”

Congress has until at least early June to reach an agreement on raising the debt ceiling.

“If they don't then, you know, you get into a troubling situation where the United States just simply isn't the same asset that everybody thought it was," Lincicome said. "Now, you know, default is a little strong, but prioritizing debt obligations, not making those payments, that is going to create a pretty serious issue for the future faith and credit of U.S. debt and U.S money."

You can watch the full interview below: