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The debt ceiling bill and its impact on young Americans

The debt ceiling bill and its impact on young Americans.

The U.S. House of Representatives recently passed a new debt ceiling bill, a significant piece of legislation that could have far-reaching implications for the economy and for young Americans in particular. This article aims to break down the complexities of this bill and shed light on what it could mean for the future tax burden of young Americans.

Understanding the debt ceiling bill:

The debt ceiling bill, if passed by the Senate and approved by the President, will suspend the debt ceiling until January 2025. In simple terms, this means the U.S. Treasury can borrow as much as it needs without any limit until that date. Once the suspension period ends, the debt ceiling will be reset to the level it has reached by that time.

The implications:

The immediate implication of this bill is that the Treasury will need to borrow around $1 trillion to refill its coffers and repay all the emergency funding measures taken between January and June. This borrowing equates to nearly $10,000 per working individual in the USA.

Who will buy the debt:

The debt can be bought by the Federal Reserve and other government agencies or by the public, which includes individual and institutional investors, pension funds, and foreign governments. If the public absorbs the debt, interest rates may have to rise to attract lenders. If the debt is bought by intergovernmental agencies, it could lead to inflation as the Federal Reserve would effectively have to print the money needed.

The future tax burden:

The crux of the matter for young Americans is the future tax burden. The current level of debt is unsustainable, with interest costs spiraling upwards. Interest paid on Treasury Securities in April was 50 percent higher than in April 2022. This means that the burden of this debt and the costs of servicing it will fall on future generations. As young Americans, it's crucial to understand that the decisions made today will impact the economy of tomorrow. The debt being accumulated now will need to be paid off in the future, and this will likely come in the form of taxes.

If you are struggling with debt and need to reduce or eliminate debt entirely, at the Law Offices of Omar Zambrano, we can help you today. For a free consultation, call us at 626-338-5505, where a member of our knowledgeable staff will be more than happy to assist you with any questions or needs you may have.

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