WASHINGTON – The national debt is at its highest level since World War II and on pace to exceed the size of the US economy. This means the amount the US owes will be greater than the total goods and services produced in an entire year.
The Congressional Budget Office says the federal debt is projected to reach or exceed 100 percent of US gross domestic product. The last time this happened was in 1946 after years of military spending to end World War II.
The cause now: Massive stimulus spending and reduced tax revenue in response to the coronavirus pandemic.
Policymakers have approved $2.7 trillion in spending since March. At the same time, federal revenue fell 10 percent from April through June, compared to a year earlier.
What's more, from March to June, the debt swelled by 16 percent, nearly $3 trillion.
Economists say that stimulus was necessary to keep the economy afloat and more is needed. The gap is expected to grow as Congress and the White House eye another round of stimulus.
Treasury Secretary Stephen Mnuchin says he's willing to sit down with Congress and negotiate a new spending bill to help struggling families and businesses but the price tag is an issue. House Democrats say they'll settle for a $2.2 trillion bailout, more than twice the amount of a Republican bill in the Senate.
"I do not support $2.2 trillion," said Mnuchin. "But what's more important is what is the breakdown in getting money to American workers, American families, kids, where we can agree on money."
Despite the struggling economy, the stock market is going strong and positive news on the vaccine front Wednesday pushed it even higher.
The CDC has notified states to be ready for a vaccine by November, the DOW closed over 29,000 points for the first time since February. The S&P 500 and Nasdaq also hit new highs.