U.S. Public Debt Surges to Record $34 Trillion Amidst Congressional Funding Dispute

The U.S. Treasury Department revealed on Tuesday that the total public debt of the federal government has soared to a historic $34 trillion. As Congress gears up for upcoming federal funding battles in the weeks ahead, the debt milestone adds to the challenges faced by lawmakers, according to a report by Reuters.

The Daily Treasury Statement for Friday indicated an increase in the total public debt outstanding from $33.911 trillion on Thursday to $34.001 trillion. Concurrently, the debt contributing to the federal debt ceiling rose from $33.794 trillion to $33.89 trillion on Friday.

It's important to note that the "debt subject to limit" category excludes certain components like the unamortized discount on Treasury bills, zero coupon bonds, debt from the Federal Financing Bank, and guaranteed debt of specific agencies.

This milestone comes shortly after the federal debt crossed the $33 trillion mark in September, driven by escalating federal deficits fueled by declining tax revenues and increasing federal expenditures.

Congress is set to reconvene next week to address looming deadlines on January 19 and February 02, aiming to finalize government spending through September. The discussions include Republican calls to reduce fiscal 2024 discretionary spending below the caps agreed upon in June.

Lawmakers also anticipate addressing emergency aid for Ukraine and Israel, potentially with attached provisions related to U.S. border security unrelated to the aid packages.

Failure to approve the fiscal 2024 spending bills could lead to a government shutdown, creating added complexity as the November presidential and congressional elections approach.

Maya MacGuineas, president of the Committee for a Responsible Federal Budget, expressed concern over the $34 trillion federal debt figure, attributing it to the reluctance of political leaders to make tough fiscal decisions. MacGuineas urged policymakers to consider measures such as raising taxes, reducing spending, or establishing a fiscal commission.

White House spokesperson Michael Kikukawa attributed the debt increases to "trickle-down debt" resulting from the 2017 Republican-passed tax cuts, benefiting corporations and wealthy Americans. Kikukawa stated that Congressional Republicans aim to further such policies, emphasizing President Biden's plan to reduce U.S. deficits by $2.5 trillion over a decade through increased taxes on large corporations, wealthy Americans, and cuts in pharmaceutical spending and tax breaks for oil companies.