| This story is incredibly frustrating because it seems to throw a lot of numbers at things (which isn't a bad thing, it's just not super useful) as if that's going to change things politically. Debt is political and the fundamentals of government debt have not changed at all. Government debt is a red herring that many fiscal conservatives wave to say we're spending too much. Unfortunately those same conservatives don't actually want "fiscal responsibility", they want to cut programs they don't agree with and continue handing out lucrative military contracts that we arguably don't need. Government debt has always been about borrowing today to fund growth for tomorrow. However, that's not what we're actually doing at all. Much of our current debt is due to COVID stimulous, which was an incredibly exceptional event. Of course that was more to "keeping things going" than fund growth initiatives. That's not to say that debt was "bad" or that we shouldn't have done it, but that much of the debt we're taking on is not going to fund infrastructure, education, or health which are all things that have significant long term benefits to society. Lastly, debt only matters in comparison to rates. If you're borrowing lower than growth of GDP, then that borrowing is generally considered a net positive. Artificially deflating rates in the late 2010s and the rapid increase in rates post-COVID is not going to do well for government debt because we can't shift our budgets quickly enough to adjust. Of course that also assumes a functioning congress, which we certainly don't have. Since it is a political issue, it will be a football and a dog whistle. Cut programs for minorities from the right, and raise taxes on the rich from the left. While one party is likely to be more irresponsible with this than the other, it's still not going to go away because it's never supposed to. Government debt is all about the cost to borrow compared to growth. The challenge we're at is that the cost is no longer cheap and we haven't been truly focusing on growth as much as we should. Instead we've just had political distractions. |
The USA's debt-to-GDP ratio has been increasing for a very long time. Every once in a while, GDP growth starts to overtake debt growth for a few years and then the debt load ratchets up further. So if the plan is to outgrow the debt, that doesn't appear to really be working so far.