Biden’s Fiscal Responsibility Act & The Debt Crisis

The US economy’s ongoing debt buildup is an issue the country is already in deep waters with, and regardless of countless efforts made by President Biden and his team, the country continues to struggle with this $32 trillion weight on its shoulders. In early June of 2023, the bipartisan Fiscal Responsibility Act was officially passed to suspend the federal debt limit till January 2025. After this time period, the limit was set to increase to accommodate for any arising obligations during the suspension period. Other than this key purpose, the other implications of this act include stricter discretionary spending caps, discretionary funding caps, cuts from federally funded programs, and increases in work benefit requirements. Prior to this enactment, debt ceilings were the sole solution towards preventing default. Considering the numerous instances when these debt ceilings were raised over the last few years, it is clear that such limits towards federal spending are an inefficient method to tackle the debt issue. From a financial standpoint, the Fiscal Responsibility Act is expected to reduce budget deficits by about $1.5 trillion over 2024-2033, which means that the difference between the US government spending and earnings will reduce significantly. Furthermore, the impact of this act spreads to other sectors including healthcare and infrastructure in the United States through alterations in various government funded programs including the FDA and CDC. In terms of healthcare, COVID-19 funds that are no longer necessary are getting revoked, which adds up to a total of 81 rescissions and $28 billion of unspent budget programs that received government funding during the COVID- pandemic. Moving forward, the Fiscal Responsibility Act aims to serve as the proper strategy to address the debt crisis without causing economic repercussions.