But the American Rescue Plan Act, which was lauded by President Joe Biden as a lifeline for the country, is expected to add more than $1.9 trillion to the national debt over the next 10 years, according to a panel of economists who say the mounting bill is a ticking fiscal time-bomb.

“We have a deep, structural debt problem,” said Jonathan Haughton, an economics professor at Suffolk University, during a live-streamed forum hosted by the Beacon Hill Institute, a conservative think tank.

Haughton noted the debt will continue growing and by 2050 is expected to double the country’s annual economic output.

The federal government borrows money to cover its deficits, and it usually does so by issuing debt. While interest rates are currently low, economists say that won’t last forever, and they note the debt has grown tremendously in the past year.

Despite public perception about borrowing from other countries, Haughton said much of the debt has been issued domestically, by the Federal Reserve.

Richard Wagner, professor of economics at George Mason University, said elected officials are increasingly issuing public debt to finance large spending bills, instead of cutting expenses or finding other ways to pay for it.

“This allows politicians to avoid taking responsibility, because those problems are put off to the future,” he said. “But sometime the future is going to come.”

David Tuerck, president of the Beacon Hill Institute, said that debt will be paid by future generations of Americans “with trillion-dollar deficits as far in the future as the eye can see.”

A centerpiece of Biden’s American Rescue Plan plan was the distribution of tens of millions of $1,400 stimulus payments.

Many economists lauded the massive spending as necessary to help the economy recover from the pandemic, with tens of millions of workers still out of a job.

Earlier this week, Treasury officials acknowledged that the Biden administration’s stimulus package has pushed the deficit to the third-highest level in U.S. history.

The government issued more than $330 billion in stimulus payments in March alone, according to the Treasury Department, even as it has taken in less revenue from income tax payments, with the filing deadline delayed until May.

The nation’s annual deficit hit $3.1 trillion in 2020, according to the Treasury, surpassing the previous record of $1.4 trillion set in 2009 during the Great Recession.

The Congressional budget office estimates that federal spending over the next 10 years will exceed revenues by $16 trillion.

The Biden administration says its $2.25 trillion jobs and infrastructure plan, which is pending before Congress, would be funded by raising corporate taxes.

 

The Salem News – April 16, 2021

• By Christian M. Wade Statehouse Reporter  

Christian M. Wade covers the Massachusetts Statehouse for The Salem News and its sister newspapers and websites. Email him at cwade@cnhi.com.