Due to clashes between the two parties, weak governance and huge military expenditures driven by Cold War mentality, the US is now unable to pay back its debts without borrowing new money.
The US Secretary of Treasury Janet Yellen warned that the US might face a default for the first time in history on June 1, provided the failure of raising debt ceiling up. The US President Biden has canceled his trip to Australia and Papua New Guinea and returned home to hold talks on raising the debt ceilings.
Partisan political clashes
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Since the beginning of this year, politicians from both parties have offered deals about the national debt, but resulted in vain because of partisan political clashes. Republicans have offered two options for solving the debt crisis after the federal government hit its legal debt limit in January - $31.4 trillion. The bills proposed by the Republicans were conditioned with cutting the government spending, for which the Democrats have rejected who insisted on an unconditional debt ceiling raise.
The debt ceiling is a lawful limit to restrict the US government from borrowing money. The increase of debt also prompted the Congress to raise the debt ceiling more frequently, as it has been raised 22 times since 1997.
The US has seen federal debts increasing exponentially in the past two decades. In October 2001, when the US launched the war in Afghanistan, the debt number was barely $5.8 trillion. The amount of debt has nearly increased by five times in the past 22 years.
The debt-to-GDP ratio has also become exorbitant. Under the Clinton and Bush Jr. administrations, the debt-to-GDP ratio was controlled under 70%. The 2008 Great Recession pushed the debt ratio above 100%, which hit 100% in 2012. The debt-to-GDP ratio kept soaring with the number recorded a historical high of 128% in 2020.
Clung to military hegemony
Debts are intimately linked with income and budget. The budget and bills show the priorities of the US government and their willingness to keep a healthy finance or not. The major spending sectors from high to low are social security, Medicare, Medicaid, military, education, interests, tax credit, veterans and nutrition.
Partisan differences on priorities of spending have impeded the federal government to cut expenditures. Democrats insist on keeping social security benefits and funds for Medicare, whereas the Republicans reject cutting investments in the military. Since the interests, which already amounted to 8.8% of annual expenses, must be repaid to borrowers, the remaining sectors for spending cuts, from the perspectives of the American politicians, are education, tax credits, veterans and nutrition.
Partisan division and implementing programs based on values resulted in less consistent policies. A new government will supersede past policies with nascent programs and investing overheads in it.
The US federal government also suffers from weak governance and profligacy which compromised them financially. According to reports from the Government Accountability Office (GAO) issued in May 2022, the total “financial benefits” from reducing fragmentation, overlap, and duplication across the federal government amounts to $552 billion from 2011 to 2022. The report sugarcoated money loss as saved “financial benefits.” What about the money wasted for years beforehand?
Instead of restructuring their debts, and changing spending habits, the US has on the other hand, clung to military hegemony.
The budget for the Department of Defense of US in FY 2023 is over $770 billion, which took more than half of the total deficit of FY 2022.
In terms of military deployment globally, as of 2021, the US has installed about 750 military bases in around 80 foreign countries. The steps of building new bases overseas have not halted. Earlier this year, the US has secured access to four additional military bases in the Philippines.
Eventually who pays for that expansion? And who benefits from it? It is clear that most of the spending goes to the military–industrial complex (MIC) and not a dime could be beneficial to average American taxpayers.
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