On this week’s episode of Capitol Gains, anchor Madison Mills, Washington Correspondent Ben Werschkul, and Senior Columnist Rick Newman talk with Committee for a Responsible Federal Budget President Maya MacGuineas about the federal debt and the potential crises the US could face if actions are not taken to get it under control.
To hear more of MacGuineas’ thoughts, listen to the full episode of Capitol Gains here.
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This post was written by Lauren Pokedoff
There's no tipping point that you can point to. There's no level of debt, there's no uh flashing warning lights which say when you cross this, it will happen. You won't know it until it happens. There's two forms of crisis that we could have. One which is very visible where interest rates really start to go up and that leads to higher borrowing costs that grows our interest payments, which are already the second highest largest item in our budget and the fastest growing area. They grow more, we have to borrow more, we get in a terrible debt cycle. That happens when everybody who lends to us domestically and abroad suddenly says, I need a higher return on this. And we are seeing signs of that. And like we just discussed a moment ago, markets will also like those tax cuts which will make the debt worse. So there will be some some some split personalities that we'll see in all of this. Um, but yes, there will be signs when the markets get nervous. But that's not the only kind of crisis, quote unquote. We are already not just that we've seen um concerns from from the markets, but we are already in what really will ultimately, I think be recognized as a crisis in that we have been borrowing too much for so long with our debt now, four years away from being the record it's ever been as a share of GDP in this country. The last time it was that large was after World War II. With interest payments squeezing out everything, with trust funds going to be insolvent in the next in the within basically a decade, we are already at the point where these debt levels have harmed our economy, our standard of living is higher to is lower, excuse me, today than it would have been if this hadn't happened. No one gets up and feels frustrated about that in the morning, except for me, probably, but um, that's the reality. You can't see it, you can't feel it, but it's already harmed our economy. It's made us weaker in terms of our ability to respond to future crises when we do have to borrow. It's meant that we haven't done revisions to our social contract that we should, our social contract right now is structured for the problems of last century. It's done nothing to deal with the huge disruptions that a tech driven economy have and will continue to create and we should have a social contract that helps us adapt to that. And like I mentioned, it's weakened our national security. We are not not have a structure that we should for all the geopolitical risks. So there is a quote unquote crisis we are living right now. It's just that you don't see the direct effects and people don't recognize how related they are.
