The mission of Issues in Perspective is to provide thoughtful, historical and biblically-centered perspectives on current ethical and cultural issues.

As the national debt of the US is a few months from reaching $39 trillion, and perhaps $40 trillion by the end of this year, “ it is puzzling how unperturbed the political class is,” writes George Will. Writer and political agitator Upton Sinclair (1878-1968) said: “It is difficult to get a man to understand something, when his salary depends upon his not understanding it.” Will concludes: “There are no long-term fiscal gains without intense short-term political pains. So, because today’s congressional careers do not yet seem likely to coincide with coming dire consequences, let them come.”

But how serious is debt for the US? Patricia Cohen of the New York Times recently wrote: “For decades crushing debt has spread misery in the world’s poor and lower-income nations. But the menace of unsupportable borrowing that now hangs over the global economy emanates from some of the richest countries. Record or near-record debt in the United States, Britain, France, Italy and Japan threatens to hamstring growth and sow financial instability around the globe. At home, it means countries must make interest payments with money that otherwise could have paid for health care, roads, public housing, technological advances or education.”

An important observation and a harsh reality: “Government borrowing when an economy is strong, and when interest rates are low, can support growth, and in times of distress can help bolster spending. The cycle of supercharged borrowing began with the 2008 financial crisis and recession, when governments rushed to provide assistance to struggling households and tax revenues fell. Relief programs during the Covid-19 pandemic, as economies shut down and health care costs rocketed, kicked debt levels up another notch as interest rates were rising and outpacing growth. But debt levels did not decline. And now, in six of the wealthy Group of 7 nations, the national debt equals or exceeds the country’s annual economic output, according to the International Monetary Fund. More and more countries are being squeezed by demographics and slow growth. In Europe, Britain and Japan, aging populations have driven up the government’s health care and pension costs at the same time that the number of workers who provide the necessary tax revenue has shrunk.”

A yearlong study requested by the European Union’s executive arm concluded that the 27-member bloc needed to spend an additional $900 billion on things like artificial intelligence, a shared energy grid, supercomputing and advanced worker training to effectively compete.

• In Britain, it will cost at least 300 billion pounds ($410 billion) to upgrade infrastructure over the next decade, according to Future Governance Forum, a think tank in London. Billions more will be needed to revitalize its limping National Health Service. Efforts to trim public spending in Italy, where debt equals 138 percent of gross domestic product, by cutting health care, education and public services, or in France by raising the retirement age, have set off vehement protests.
• France, which has been politically deadlocked over the budget for months, saw its sovereign debt rating downgraded last fall, raising questions about the country’s financial stability.
• Tokyo’s debt is already staggering. It amounts to more than twice the country’s annual economic output. The prospect of an even deeper hole grew last week when Prime Minister Sanae Takaichi suddenly called for a snap election. Both Ms. Takaichi’s Liberal Democrats and opposition parties are promising to increase spending and lower taxes . . .  For decades, Tokyo managed to fund its spending through rock-bottom interest rates that minimized borrowing costs. The Bank of Japan began to reverse its longstanding policy of ultralow interest rates in 2024. It is moving slowly because of fears of financial instability, Mr. Rogoff of Harvard said. Japan has “stuffed debt into every orifice of the financial sector — pension funds, insurance companies, banks. And there are inflation pressures.”
• The U.S. national debt is now $38 trillion, roughly 125 percent the size of the American economy. In January Trump vowed to further increase military spending to $1.5 trillion dollars over the next fiscal year, which the Committee for a Responsible Federal Budget calculated would add $5.8 trillion to the national debt, including interest, over 10 years. Net interest payments have tripled over the past five years, reaching roughly $1 trillion. They now eat up 15 percent of U.S. spending, the second biggest expense after Social Security.

Binyamin Appelbaum, also of the New York Times, adds an additional insight into the brutal reality of the US national debt: “For the past half-century, policymakers have taken for granted that the Federal Reserve would seek to maintain control over inflation, and that it had the power to do so. It is time to start rethinking both of those assumptions. President Trump’s nomination of Kevin Warsh as the next Fed chairman is intended to break the Fed’s focus on inflation. Mr. Trump made clear that he wanted the Fed to deliver lower interest rates, inflation be damned, and said plainly and publicly that he would nominate someone willing to deliver on his demands. “Anybody that disagrees with me will never be the Fed chairman,” he posted on social media in December. Even if the central bank under Mr. Warsh defies Mr. Trump and keeps trying to do its job, it will face a second problem: Its hands will be increasingly tied by the federal debt.”

Why does Appelbaum make this argument? “The government’s dependence on borrowed money is growing at an unsustainable rate. The Treasury paid $970 billion in interest last year, or about 19 cents of every dollar collected in taxes. By 2035, interest payments on the debt could consume 27 cents of every tax dollar. It is a problem that Mr. Trump has exacerbated through his reckless approach to fiscal policy, including another round of large tax cuts in 2025. There are also signs that foreign investors are reconsidering their appetite for lending to the United States. A Danish pension fund recently announced plans to divest its U.S. Treasuries . . . If federal borrowing . . .  continues to outpace the nation’s economic growth, it will force the Fed onto the horns of a dilemma. Governments that struggle to pay their debts often turn to monetary policy for relief, pressing their central bankers to print more money. That drives up inflation. The alternative, however, is allowing government to default.”

The Fed is charged by Congress with maintaining the health of the financial system and the stability of the broader economy. Its main tool is its ability to raise and lower interest rates, modulating the pace of economic growth to keep unemployment low and inflation steady. Raising interest rates to maintain control of prices is never popular, but presidents since the inflationary 1970s have generally accepted that it is in the national interest, even if it causes political pain. One of the most consistent aspects of Mr. Trump’s political identity, however, is a refusal to countenance short-term sacrifices . . . He has said repeatedly that the Fed should lower interest rates, both to boost economic growth and to reduce the government’s borrowing costs. Of course, if Mr. Trump does get his way, he may still be in for a rude shock. The central bank can force down short-term interest rates, at least for a time, but if markets conclude that the effect will be inflationary, both short- and long-term rates are likely to increase. By messing with the Fed, Mr. Trump could end up increasing the federal government’s borrowing costs — and those of consumers, to boot.”

The Committee for a Responsible Federal Budget recently described six possible crisis scenarios for the US debt crisis. George Will summarizes these potential scenarios:

• “Upwardly spiraling debt could provoke a financial crisis. Investors anxious about the U.S. fiscal outlook would demand sharply higher interest rates to entice them to purchase Treasurys. This would ignite a self-reinforcing debt spiral: Higher interest rates would slow economic growth, reducing government revenue while increasing government spending on debt service. Higher interest rates on new debt would reduce the value of the much larger amount of existing debt. This would weaken the balance sheets of banks and other financial institutions. Because these would be deemed “too big to fail,” bailouts and spending to stimulate the sputtering economy would exacerbate the financial crisis.
• An Everest of debt is an incentive for an inflation crisis to reduce the value of existing debt by paying lenders with debased dollars. But inflation would become baked into the expectations of investors, who would demand higher interest rates. Then R>G would bite: When interest rates paid on debt exceed the rate of economic growth, a crisis intensifies as rising interest rates depress economic growth.
• An austerity crisis would occur with a large and abrupt combination of tax increases and spending reductions. Unemployment would increase, and the Federal Reserve would have little ability to combat economic contraction by reducing interest rates. Austerity is, however, rare in nations accustomed to assuming its opposite — an unending expectation, indeed entitlement, to opulence. The Economist says that “only once in the era of universal suffrage has a G7 economy” — a leading developed nation — “achieved a big fall in debt primarily by tightening its belt” (Canada in the 1990s).
• A currency crisis would result from a depreciating dollar incentivizing foreign governments and private investors to diversify away from U.S. debt. A default crisis, although unlikely, would have the merit of bluntness: continuing to repay principal but not interest, or “restructuring,” which is government-speak for not repaying some debt.
• The most probable, and most ominous, outcome would be a gradual crisis. In 2021, debt service consumed less than 10 percent of federal revenue. In 2025: 18 percent. By being gradual, a protracted crisis would mean a demoralized nation slowly accommodating perpetual economic sluggishness, waning investments in research and development, social stagnation, diminished contribution from the entrepreneurial energies of talented immigrants, and waning U.S. geopolitical influence.”

What are we to do? William A. Galston of the Wall Street Journal offers a road to fiscal sanity. Personally, I am not optimistic this will ever occur.

• “To begin, both chambers of Congress should endorse a resolution, introduced recently by a bipartisan team of House members, that would establish an annual deficit target of 3% of GDP, roughly half the current level and low enough to stabilize the debt as a share of the economy. Although feasible, this goal is ambitious, which is why the resolution calls on Congress and the administration to chart a multiyear path.
• Second, by the end of the next president’s first term, both the Social Security trust fund and the Medicare Hospital Insurance trust fund will be empty, and the benefits on which tens of millions of Americans rely would be slashed. Lawmakers from both parties will have to work together to keep these programs solvent for the long term. Eliminating the gap between outlays and revenues for these programs would yield more than half the reductions needed to reach the 3% deficit target by 2033. The rest would need to come from spending cuts and revenue increases attributable to other government activities.
• Finally, the path to fiscal responsibility must begin now, in the 2027 budget. To the extent that Congress and the administration can’t agree on spending cuts large enough to finance a large increase in defense spending, they should fill the gap with an across-the-board income surtax. They shouldn’t enact spending for defense—or any other item—that raises the budget deficit above the baseline. Nor should they enact new tax cuts that raise the deficit. This is what it means to stop digging.”

The solution to this crisis is not rocket science. Two simple facts obtain: There must be increased revenue and there must be reduced spending. But to accomplish both there must be a willingness within both political parties to compromise:  Taxes will need to go up, and changes to Social Security and Medicare are necessary, since both are major drivers of federal spending. But the Congress and the current president are unwilling to do; witness the ridiculous “big beautiful” Trump legislation. The financial future of the US is fiscally unsustainable, but no one in either political party really seems to care.

See Patricia Cohen in the New York Times (27 January 2026); Binyamin Appelbaum in the New York Times (30 January 2026); George F. Will in the Washington Post (4 February 2026); and Willima A. Galston in the Wall Street Journal (26 February 2026).