October 06, 2023

ICYMI: Out-of-Control Deficits are Threatening U.S. Financial Stability

The threat of the debt is catching up to us—the consequences are dire. 

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  • “The U.S. has long been the lender of last resort to the world. During the emerging-market panics of the 1990s, the global financial crisis of 2007-09 and the pandemic shutdown of 2020, it was the Treasury’s unmatched capacity to borrow that came to the rescue."
  • "Now, the Treasury itself is a source of risk. No, the U.S. isn’t about to default or fail to sell enough bonds at its next auction. But the scale and upward trajectory of U.S. borrowing and absence of any political corrective now threaten markets and the economy in ways they haven’t for at least a generation."
  • “Deficits have been wide for years. Why would they matter now? A better question might be: What took so long?”  

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Since the financial crisis, the federal debt has grown by over $20 trillion. Liberal economists and politicians pointed to low interest rates as justification for this massive run-up in debt. However, the unprecedented deficit spending of recent years, much of which was financed by the Federal Reserve, sparked the highest inflation in 40 years and in turn spurred the Fed to raise interest rates. As a result, concerns about the U.S.’ ability to right its fiscal ship have grown, increasing the perceived risk of treasuries and driving rates even higher.

With artificially low interest rates now gone, the true effects of our unsustainable deficits and debt are now manifesting. This includes a deteriorating fiscal outlook, a sluggish economy, declining wages, and a drastic shortage of affordable living for American families.

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Unlike President Biden – whose FY 2024 budget would enact the highest sustained spending level in American history – House Budget Republicans are taking the threat of the debt seriously and have a plan to reverse the curse of runaway spending and failed economic policies.

For far too long, Americans have felt the pain of high inflation. House Republicans remain committed to reining-in Democrats’ woke and wasteful spending and unleashing economic prosperity throughout America once again.