U.S. government debt surge experts worry about “chronic illness”

Congressional Budget Office recently released a report that, due to COVID-19’s economic interruption, Congress launched a large-scale fiscal response measures, estimated that the federal budget deficit in fiscal year 2020 will reach $3 trillion and 300 billion, which is more than three times in fiscal year 2019. < / P > < p > CBO predicts that in fiscal 2021, the level of US federal government debt will exceed GDP. The last time this happened was in 1946. < / P > < p > the U.S. federal government originally had “high debt to Taiwan”. Coupled with the decline of revenue and increase of expenditure during the epidemic period, the financial situation further deteriorated. In this case, should a new round of financial rescue measures be introduced? What long-term challenges will the debt problem face? The latest CBO report confirms the committee’s continued warning for some time that the U.S. fiscal situation is “unsustainable” and that the budget outlook will continue due to “irresponsible” tax and spending policies, as well as growth in health care and retirement spending Deterioration. < / P > < p > the tax cut bill signed by US President trump at the end of 2017 will reduce taxes by nearly $1.5 trillion in the next 10 years. Although the U.S. economy maintained a moderate expansion before the outbreak of the epidemic, tax cuts and increased fiscal expenditure led to a rapid increase in fiscal deficit and public debt. < / P > < p > the epidemic has worsened the government’s financial situation. Since March, the US Congress has introduced an economic rescue bill with a total amount of about US $3 trillion. At the same time, the epidemic led to a deep recession in the U.S. economy, tens of millions of people lost their jobs, a large number of enterprises went bankrupt, and the tax revenue of the federal government, state and local governments decreased significantly. As the epidemic continues to spread and the economy is in deep trouble, Congress also plans to introduce a new round of financial rescue plan. < / P > < p > despite the surge in government debt, economists and policy makers generally support a new round of financial assistance. Jeffrey Sachs, an economics professor at Columbia University, told reporters that the U.S. government lacks an overall strategy to fight the epidemic, and its economic recovery has been hit hard. It still needs the financial support of the federal government. < / P > < p > Loretta Meister, President of the Federal Reserve Bank of Cleveland, said that the current U.S. economic recovery is still “fragile”. Without further financial support, it will be difficult for the United States to survive the difficult economic period and embark on the road of sustainable growth. Mester said the deficit problem is also very important, but the U.S. economy is just beginning to recover, and now is not the time to worry about debt. < / P > < p > although short-term stimulus is necessary, the continuous deterioration of US fiscal situation in recent years also needs to be solved. Experts believe that after the epidemic, the United States needs to face up to the long-term debt problem and take practical measures to improve its financial situation in order to meet the challenges that may be faced in the future economic development. < / P > < p > economists worry that the surge in government debt may lead to a “crowding out effect” on the private sector, that is, the government consumes a lot of savings, the private enterprises have less funds available for investment, the borrowing cost increases, and the economic growth is damaged. At the same time, when the proportion of debt to GDP increases, the cost of government financing may also increase. < / P > < p > Michael Peterson, chief executive of the US Peter Peterson foundation, said that the US fiscal situation was unsustainable before the epidemic. Even in a strong and healthy economic environment, the fiscal deficit this year will exceed one trillion US dollars. He believes that the current US fiscal policy has weakened the ability to invest in the future and deal with unexpected situations. < / P > < p > “strive for a responsible federal budget committee” said that after the end of the epidemic, U.S. policy makers must turn their attention to reducing long-term debt and deficit, and strive to consolidate the fiscal foundation.