eichengreen175_Robert AlexanderGetty Images_USTreasury Robert Alexander/Getty Images

Putting America’s Debt in Its Place

Those who imagine an imminent debt crisis in the United States are making much ado about nothing. It would be better if US policymakers saved their energy – and political capital – for fighting real rather than imaginary battles.

BERKELEY – The ruckus in the United States over the federal debt ceiling has redirected attention toward soaring public borrowing. Against the backdrop of monetary tightening by the Federal Reserve, piling up more debt is reinforcing concern about the explosive growth of the government’s interest obligations.

It’s a terrifying narrative, redolent of impending crisis. The only problem is that virtually every element of it is wrong.

First, government debt is not soaring. The Congressional Budget Office forecasts that debt held by the public will rise from a bit less than 100% of GDP in 2022 to slightly more than 110% in 2033. While worth watching, this increase is by no means catastrophic. And while the CBO sees the debt ratio, fueled by entitlement spending, rising more quickly after that, there are more pressing problems to attend to today than what happens after 2033.

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