The Debt Ceiling Deal

Republicans have a unique opportunity to make impactful change to the current government spending policy. US government spending has grown 40% since pre pandemic levels, starting with the massive stimulus that was dished out in 2020 for covid relief. Republicans have a chance to cut that 40% and help put the US in the driver seat of fixing arguably it’s biggest issue, the national debt.

In the past month, Republicans have passed their own debt ceiling legislation providing solutions to the issues they think are most important. You can read some of the highlights of this bill under the “Limit, Save, Grow” column of the illustration below.

The new debt ceiling deal was announced over the weekend and it’s not great. This deal does a few things and none of them are really productive towards the national debt problems at hand. You can read about it in some of the highlights below.

In summary, the new deal increases the debt ceiling from $31 trillion to $35 trillion over the next two years. This kind of spending is going to put a major strain on the US dollar, as other countries continue to dump it. It’s also going to keep inflation elevated, causing high interest rates for a longer period of time. Higher interest rates mean a greater change of a recession and economic downturn.

The frustrating part about this issue is that the solution is simple.

• Cut deficit spending.

• Increase productivity by cutting taxes and incentivizing business growth.

Cutting deficit spending will keep the debt complacent and create time for it to be paid back. Increasing productivity will help bring more money into businesses and eventually consumers, allowing the government to collect more money to start paying the debt back. With lots of different avenues for major production growth (AI, Meta Verse, Crypto, new energy sources), the possibility of having an industrial revolution 2.0 and getting ourselves out of this mess is realistic.

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