For the fiscal year of 2022, there was a budget deficit of 1.4 trillion dollars. This means the United States is in nearly 31 trillion dollars of debt. This is alarming for Congress because if they do not get a hold on spending and the amount of debt we are in, this country could be heading toward a financial crisis. Congress is aware of this, and it is one of the main concerns for the 2023 fiscal year. Congress needs to spend less money this year, which always seems to be a problem for them. They project that by 2032, in just ten years, the federal debt will be over 110% of the country’s GDP. This is extremely alarming as this will have consequences on the American economy and the global capital markets. Excessive government spending on things such as the military or stimulus checks take away from the government’s ability to provide essential goods for its citizens. The new focus for Congress should be to cut back spending and refocus and reanalyze where they have been spending their money.
The last major deficit reduction deal negotiated over a debt limit standoff was in 2011. Then Republican House Speaker John Boehner and then Democratic President Barack Obama agreed to the Budget Control Act within days of the Treasury reaching the debt limit. The Budget Control Act also set up a bipartisan fiscal commission‐the Joint Select Committee on Deficit Reduction, also known as the Super Committee. Congress tasked the committee with identifying spending cuts to entitlement spending. In the event, the committee process failed, automatic spending cuts, called sequestration in the budget speech, would kick in. The committee did fail, and sequestering ended up taking place. The Budget Control Act was not as effective as it could have been due to Congress renegotiating it several times to avoid more substantive cuts to government programs. Congress needs to shift gears by pursuing deficit reduction that enables economic growth and complements the deflationary actions of the Federal Reserve. This action needs to happen quickly before we are all caught in a financial crisis.