It’s always more comfortable to ignore troublesome information but forgive me for bringing you the national debt projections from the ever-watchful Peter G. Peterson Foundation. They just reported “The Congressional Budget Office released long-term projections in June, showing that [federal government] debt held by the public would climb from 98 percent of gross domestic product (GDP) in 2023 to 181 percent in 2053 if no changes to current law are made.”
“Interest rates on U.S. Treasury securities have a significant influence on federal borrowing costs, and therefore, on the amount of federal debt accrued. According to CBO’s projections, the average interest rate on U.S. Treasury securities could climb from 2.7 percent in 2023 to 4.0 percent in 2053.”
But that seemingly small percentage difference masks a coming fiscal calamity. “The national debt is already on an unsustainable path, caused by a structural mismatch between spending and revenues, and rising interest rates could exacerbate that problem. Even if interest rates decline from today’s levels and stay low, debt will exceed its historic high and continue to rise.”
The Foundation’s conclusion: “To mitigate the risks of potentially higher interest rates causing economic damage, policymakers should work together to put the nation on a sustainable fiscal path.”
Well, yes, they should. But they won’t. Neither Democratic President Joe Biden nor any of the Republican contenders will dare to face up to this issue, because politically it’s a dangerous loser. Farewell, America.