TIME Magazine: High Debt Threatens the U.S. Economy
The difficulty U.S. Congress has had agreeing on spending for this year and avoiding a government shutdown is an indication of just how hard it will be to deal with our longer term debt crisis. Our rising debt burden is a problem we must confront in order to preserve our nation’s ability to address the many challenges on the horizon and to invest in our nation’s productive capacity.
The nonpartisan Congressional Budget Office (CBO) estimated that there was a $1.7 trillion dollar gap between what the government spends and the revenue it takes in 2023, nearly double the annual budget deficit from last year. Absent significant policy changes, under even the most optimistic scenarios, the accumulated federal debt held by the public will rise above 100 percent of GDP by 2053, a level well above historical experience.
This fiscal imbalance reduces our capacity to spend on national priorities, in ways that will advance economic growth and shared prosperity. As laid out in our new Aspen Economic Strategy Group policy volume, such a high level of debt threatens the resiliency of the U.S. economy. It will push up interest payments and slow economic growth by crowding out private investment and public spending that could otherwise be used to improve America’s workforce, infrastructure, and productive capacity. As one stark illustration of this fact, the federal government is on pace to spend more paying down the interest on the debt than on all programs serving U.S. children, including early childhood education and public health insurance programs that have been shown to yield large social returns.
In addition, the rising debt makes it much more expensive to raise the funds that would stimulate the economy when the next recession inevitably arrives, or to allocate necessary spending in the face of unforeseen setbacks and geopolitical shocks.