ALBAWABA - The US federal debt is expected to exceed its GDP this year, with little public alarm and a government powerless to alter the trend. The Wall Street Journal says rising debt follows historical tendencies that lead to great power fall.
Under Trump and Biden, the national debt has grown by $7 trillion apiece. Despite these astonishing numbers, neither major party has addressed the oncoming financial disaster.
Niall Ferguson argues that superpowers that spend more on debt interest than defense are at risk. The Spanish Empire, France's Ancien Régime, the Ottoman Empire, and the British Empire all declined this way. Now it looks to endanger America.
CBO estimates that the federal government will spend $892 billion this fiscal year on national debt interest payments, which total $28 trillion. According to the Wall Street Journal, this surpasses the military budget of $816.7 billion and almost equals healthcare spending.
Late 1990s government budget surpluses were fleeting. However, this year's deficit is predicted to be $1.9 trillion. Government debt reached 70% of GDP a decade ago. It equals GDP this year and is expected to reach 106% by 2028 and 122% by 2034.
The CBO expects debt payments will block out alternative investments and lower income growth by 12% over the next 30 years. The Fiscal Responsibility Act reduced the deficit this year, but previous warnings concerning debt crises remain pertinent.
Money creation may prevent sovereign currency default, according to modern monetary theory. Historical examples are less convincing.
Credit rating downgrades or overseas lenders' unwillingness to lend might cause a U.S. financial crisis. Treasury Secretary Janet Yellen recommends stabilizing debt but cautions that continuing tax cuts without income or expenditure adjustments might aggravate the situation.
While the UK, Canada, Denmark, Sweden, and Finland have stabilized their finances, the political will to handle U.S. deficits and debt is weak.
Yale University historian Paul Kennedy cautions that America's debt trajectory resembles previous great powers' overexpansion. The U.S. faces serious economic consequences without major policy reforms, underlining the necessity for bipartisan collaboration.
