National Debt Tops $32 Trillion for the First Time

By Yuval Rosenberg

Welcome to the weekend! The national debt hit another milestone today. Before we get to that, thought, a quick programming note: We will be off Monday for Juneteenth and will be back in your inbox on Tuesday.

Here’s the latest.

National Debt Tops $32 Trillion for the First Time

The U.S. national debt surpassed $32 trillion for the first time on Thursday, according to Treasury Department data released today.

The milestone comes less than two weeks after President Joe Biden signed into law the Fiscal Responsibility Act of 2023, his compromise with Republicans led by House Speaker Kevin McCarthy to trim spending by a projected $1.5 trillion over a decade and suspend the nation’s debt limit until January 2025.

Total public debt outstanding — which includes debt held by the public as well as that held by federal trust funds and other government accounts — reached $30 trillion for the first time in early 2022 and then hit $31 trillion less than nine months ago. As of the end of day Thursday, the debt stood at $32,039,244.

“The $32 trillion mark arrived nine years sooner than prepandemic forecasts had projected, reflecting the trillions of dollars of emergency spending to address Covid-19’s impact along with a run of sluggish economic growth,” Alan Rappeport of The New York Times notes. “Republicans and Democrats have expressed concern about the nation’s debt, but neither party has shown an appetite to tackle its biggest drivers, such as spending on Social Security and Medicare.”

Fiscal hawks are urging lawmakers to build on the deficit-cutting momentum of the Biden-McCarthy deal. “We can’t even get through a single fiscal year anymore without adding a trillion dollars in debt, and $33 trillion is likely just around the corner,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a nonprofit that advocates for deficit reduction. “We need a return to responsible fiscal policy if we’re ever going to get ourselves out of this mess. The formula to get there should be simple: no new borrowing – meaning fully offset all new spending or tax cuts – and better yet, hold off on them until our debt is under control; address the drivers of our runaway debt; and reform our broken budget process. It’s not rocket science.”

Some GOP Hardliners Say They’d Welcome a Shutdown

The Senate Appropriations Committee intends to start working next week on funding bills for fiscal year 2024, using the nearly $1.6 trillion cap on discretionary spending that was agreed to in the bipartisan budget deal signed into law earlier this month.

“After holding nearly 40 hearings to assess our country’s needs for the coming year, we are keeping the appropriations process in the Senate moving forward in a bipartisan way,” Sens. Patty Murray, the Democratic Appropriations Chair, and Susan Collins, the committee’s top Republican, said in a statement.

The problem, however, is that House Republicans are approving funding bills reflecting 2022 spending levels, cutting about $120 billion from the bipartisan agreement for 2024, setting up a clash that could produce another showdown and possibly a government shutdown at the beginning of the new fiscal year in October.

Saying they are under no obligation to appropriate funding at the agreed-to caps, which they say set a ceiling rather than a floor, hardline House Republicans are attempting to reclaim their goal of pushing spending levels back to 2022 levels. And they’re not happy with Speaker Kevin McCarthy’s failure to reduce spending to levels that the most conservative House Republicans want to see.

“He’s not doing ‘22 spending levels; he’s talking ‘22 spending levels,” Rep. Andy Biggs, who previously led the far-right Freedom Caucus, said, referring to McCarthy. “Talk is cheap.”

As worries about a potential shutdown in the early fall grow, some GOP hardliners say they don’t see a problem. “We shouldn’t fear government shutdown,” Rep. Bob Good, a member of the House Freedom Caucus, said. “If we shut it down in order to try to bring fiscal stability and fiscal solvency, that will save the country from an economic and fiscal standpoint for our kids and grandkids.”

Making his view of the value of the federal government perfectly clear, he added, “Most of what we do up here is bad anyway.”

Florida Rep. Byron Donalds, another Freedom Caucus member, has much the same take. “I’m not afraid of shutdowns,” Donalds told Punchbowl News. “American life doesn’t halt because government offices are closed … We have to be serious about spending.”

Democratic Sen. Chris Van Hollen said the hardline rebellion does not bode well for the appropriations process. “This is obviously a bad start in the House because the ink was barely dry … before Speaker McCarthy ran away from the bargain he struck,” he told The Hill. “It seems pretty clear that Speaker McCarthy’s No. 1 priority is political survival and I think feels he has to cater to the far-right, MAGA crowd there. It’s clearly going to make for some rocky moments over the next couple of [months].”

Hawaii Sen. Brian Schatz, a Democratic appropriator, told The Hill that the House spending plan “doesn’t strike me as serious. … I don’t think it can pass the House and even if it does it definitely can’t pass the Senate,” he said. “We’re going to have to do a bipartisan appropriations bill and they can start out with whatever partisan position they want, but this ain’t it.”

Quote of the Day: Debt Ceiling No More?

“Democrats should be moving forward on all options to get rid of the debt ceiling. The debt ceiling has become a tool used by only one side to try to advance their extremist views that they otherwise could not get through the democratic process, and we’ve got to put a stop to it.”

— Sen. Elizabeth Warren, a Democrat from Massachusetts, talking to Politico about what she sees as the need to eliminate the federal debt limit. Although President Joe Biden said he would consider using the 14th Amendment to neutralize the federal debt limit law, Politico’s Jennifer Haberkorn and Adam Cancryn say the White House has grown quiet about that tactic now that the showdown over raising the debt ceiling has ended.

Democratic insiders say the issue has lost its urgency, and likely would offer little political payoff to whomever attempts to eliminate the ceiling through the legal system. The Biden administration is also confident that it can handle any future efforts to use the debt ceiling to force another fiscal showdown, Haberkorn and Cancryn write.

Harvard law professor Laurence Tribe, who has argued that the 14th Amendment offers a way around the debt limit, said the issue has clearly fallen by the wayside. “I haven’t been called with any urgent requests to help,” he said. “I don’t know of anybody who has this high on their agenda.”

Number of the Day: $930 Million

The U.S. government on Friday announced more than $930 million in grants to expand high-speed Internet infrastructure across 35 states and Puerto Rico. “The so-called middle mile grants, announced by the Department of Commerce, are meant to create large-scale networks that will enable retail broadband providers to link subscribers to the internet,” the Associated Press explains. “Department officials likened the role of the middle mile — the midsection of the infrastructure necessary to enable internet access, composed of high-capacity fiber lines carrying huge amounts of data at very high speeds — to how the interstate highway system forged connections between communities.”

The funding for the grants comes from the bipartisan infrastructure bill President Joe Biden signed into law in 2021, which includes $65 billion to expand high-speed Internet access. The largest new grant, nearly $89 million, reportedly went to a company based in Alaska that hopes to provide a fiber network in an area when some 55% of people lack internet access.

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