One of those topics that Wall Street Journal writers in my day called DBIs is the national debt. It is boring but significant. Headstands were used to illustrate how complex and intangible these subjects are. This is the history of the 27th largest material manufacturer in the western world, according to one Journal article. Oh, study it nonetheless.
I’ve always resisted DBIs. A very obscure economic topic called total factor productivity was the subject of a lengthy WSJ story I once wrote. I wrote a five-part set on the World Trade Organization in my earlier years at DTN. Speak about a topic that is eye-opening.
Commentators today have no choice but to risk glazed-over eyes and address the national debt because it has grown to be so significant that it is becoming so significant.
Even the debt seems uninteresting because we’ve been conned into believing that the future will force the government to impose huge tax increases or print money to stoke runaway inflation, or both. Basically, it’s currently inflicting pain, and paying it back, or halting its growth, will result in problems of a different kind.
Certainly, the more the debt grows, as it will under Trump and as it did under Harris, the more the pain will become.
Develop it has undoubtedly. The public’s national debt has increased by 12 % to$ 28.9 trillion since 2015, according to the government. It has increased in every political leadership since this decade.
The total federal loan, which includes authorities debt held by various government agencies, is equivalent to 123 % of the gross domestic product, or$ 36.2 trillion. To put that into perspective, we haven’t been in a main battle for the past five years because the amount at the end of World War II was just 106 %.
Consider four possible ways the government may address the debt problem in order to know why the debt will keep rising and the suffering it will produce.
1 ) Allow it to grow. In the near future, this is the least painful and most likely strategy. Totaling$ 4.5 trillion over ten years, the Trump presidency and the Republican House of Representatives plan to cut taxes. No one believes that the state may reduce spending even slightly. Estimates of the debt’s addition by 2035 range from$ 4 trillion to$ 10 trillion.
Pain? Interest rates are already being pressured by the loan. Investors in long-term bonds anticipate higher risk, including having their money repaid in undervalued dollars. Their worries increase costs.
Daily interest rates are also affected by long-term relationship rates. The offer on the 10-year Treasury note is significantly higher compared to the standard rate that the Fed has cut by a full percentage point since September. In consequence, the interest charge on the typical 30-year loan is also affected. Land interest rates have hardly dropped in many areas and continue to be higher.
2 ) Reduce spending. Although the government does some of that, it falls short of maintaining a healthy finances. Only 16 % of the resources, or what is considered voluntary non-defense spending, is being attacked by Elon Musk.
The state is a big contributor because of its obligations to folks, starting with Medicare, Medicaid, and Social Security, as well as meals stamps and farm applications.
Medicaid and meal mark cuts are being looked at by the House. If they’re made, they’ll be a source of intense problems for many Americans.
Farmers and farmers are not the only ones. Food aid worth$ 4 billion a year was one of the foreign aid initiatives the administration has targeted.
Some producers who contracted with the authorities to improve their farming methods may not receive compensation for the money they’ve spent. Additionally, budget cuts that use food stamps may make it harder to get a new land costs.
3 ) Increase income. Because the GOP has no taste for real tax increases, this won’t happen. As previously mentioned, revenue cuts totaling$ 4.5 trillion are on the board. Although proponents claim that tax breaks promote economic growth, few have so far produced enough progress to “pay for themselves.” Nevertheless, American taxpayers would be in immediate pain if tax increases were to occur.
4 ) Hope for a rise in the performance of the economy. This may result in higher tax revenues and stronger financial growth. As more businesses adopt AI, efficiency may increase, as it did in the late 1990s during the internet boom. This is not an absurd hope.
However, the efficiency gains from the internet boom quickly vanished, just like earlier booms. If the upcoming AI growth is stronger and more persistent, it may in fact increase taxes revenue for a while. But enough to begin reducing the national loan? That puts a lot of pounds on a hope, which is not a plan.
No one is pushing for the incredibly painful changes that would be most important in programs like Social Security and Medicare, despite the fact that today’s debt-inflicted problems is broadly spread. Washington does allow the debt to grow. Long-term attention rates will continue to be subject to higher pressure.
Urban Lehner, a former long-time Asia journalist and director for the Wall Street Journal, is writer professor of DTN/The Progressive Farmer.
This post, which was originally published on March 4th, by the latter news business and is now being republished by Asia Times with authority, is titled” Copyright 2025 DTN/The Progressive Farmer.” All trademarks are reserved. Follow @urbanize, on @urbanize, and on @urbanize.