Congressional Republicans May Set Off the Debt Bomb

We can’t even count the number of times we have written about America’s slide into unsustainable debt.  When will calamity happen?  We have no idea.  Could Trump figure out a way to get us on a better financial footing?  Maybe.  Will the Democrats have any better ideas for stopping the deficit spending?  No way.  Are Republicans seriously talking about major tax cuts without spending cuts?  Maybe.  Doesn’t that seem super irresponsible?  Yes it does.  Is a fiscal nightmare coming for America and the world?  Yes.  Do we hope that life continues as normal until Jesus blows the trumpet and the disappearance of millions triggers the economic collapse?  For sure!!!

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Congressional Republicans have approved the most fiscally irresponsible budget resolution since the modern budget process began five decades ago. It allows Congress to slash taxes by $5.3 trillion and expand spending by $517 billion over the decade. This $5.8 trillion addition to the deficit (plus interest) would exceed the cost of the 2017 tax cuts, 2020 CARES Act, 2021 American Rescue Plan, and 2021 Bipartisan Infrastructure Law—combined.

Tales of impending debt crises have been scaring voters since the days of Ronald Reagan, without coming true. But surviving an unhealthy diet and lifestyle until now doesn’t mean you can disregard your health forever. Washington’s debt path is so unsustainable that it ultimately endangers the United States economy. And time is running out to change course without substantial disruption.

 Economists agree that annual budget deficits—when the government spends more than it brings in—are less meaningful than the total debt held by the public as a share of the economy. The federal debt temporarily exceeded 100 percent of the economy during World War II, but subsequently averaged just 40 percent through 2008. At a 5 percent interest rate, the cost of paying interest on that debt sustainably consumed 2 percent of GDP, or one-ninth of annual tax revenues.

Since 2008, trillion-dollar budget deficits have pushed the debt to 100 percent of the economy—approaching World War II levels. The dangerous combination of rising debt and interest rates have driven annual interest costs up from $352 billion in 2021 to nearly $1 trillion this year. During that time, interest costs have surpassed Medicaid, defense, and finally, Medicare to become the most expensive federal budget item after Social Security—which itself will be surpassed in perhaps 15 years.

Simply continuing today’s tax and spending policies will escalate the federal debt to 241 percent of the economy over the next three decades. And if interest rates rise even one percentage point above the government’s long-term projections, which they easily could, the debt would reach 295 percent of GDP. Interest on the debt would then consume four-fifths of all annual federal revenues.

Debt at that scale would force Washington to borrow an enormous share of the economy’s savings—leaving less money available to families and entrepreneurs for home, auto, and business loans. This lack of savings available for investment would choke economic growth and push up interest rates. As a result, the Congressional Budget Office estimates that this debt surge would shave up to one-third off the long-term growth of family incomes.

https://www.theatlantic.com/economy/archive/2025/04/congressional-republicans-might-set-off-debt-bomb/682567/