The US public debt surpassed the unprecedented $21.5 trillion mark. Economist Aleksandr Abramov explained the possible reasons and the eventual reaction of investors.
US public debt hit a record high, surpassing $21.5 trillion, the Washington Examiner reported. During the financial year 2018, which ended September 30, it increased by $1.2 trillion.
The edition also underlined that by 2020 the US budget deficit will exceed $1 trillion, while public debt will remain in a very fast-growing trend, because government spending is not controlled at all.
In August, the US Congress reported that government loans in the first 11 months of the financial year were $895 billion, which is $222 billion more than the previous year.
Specialist at the Russian Applied Economic Research Institute, Aleksandr Abramov, explained what could have caused the US public debt to rise to such an extraordinary level.
“We have to note from the outset that while the US is able to fulfill its debt service, that is, to pay without delay, it is unlikely that any of the investors can complain about the high level of debt,” said the economist.
However, he says that this has become a major problem and today’s record was probably triggered by such problems as tax reform and other indulgences that cut part of the budget’s revenues.
For Aleksandr Abramov it is evident that, in calculating the tax reform, the US was expecting new incomes to come in some time. But that has not happened yet. So the growth of the US public debt “becomes a more alarming problem and the world today will probably be expecting from the US more or less clear explanations of what will happen afterwards,” concluded the economist.
Despite the growing debt, this has not stopped US President Donald Trump from declaring an economic war against the whole world, including China, despite the negative impact it will inevitably have on the country.