High debt levels become dangerous when rising interest rates push up borrowing costs and governments fail to respond. With little political appetite to rein in its federal deficit and ballooning debt, the United States risks finding itself with few options when the next war, recession, or financial crisis arrives.
CAMBRIDGE—America’s fiscal position is increasingly looking like a train hurtling along a twisting mountain track. No one seems willing to slow down for fear of falling behind schedule and losing their job. Even if the train doesn’t crash, it is worth asking: Why keep pushing it? Despite solid growth, the federal deficit is about 6% of GDP. Yet the option of slowing down does not appear to be in President Donald Trump’s playbook.
