For starters, rising debt tends to slow down wage growth and push up interest rates, meaning your mortgage, car loan, and credit card repayments can all get more expensive.
Rising debt tends to slow down wage growth and push up interest rates, which will have an impact on US citizens (Getty Stock Image)
It also means a bigger and bigger chunk of the government’s annual budget goes straight to paying off interest, leaving less money for things like healthcare, infrastructure, and education.
The interest bill alone already exceeds $1 trillion a year – that’s more than the US spends on defense.
MacGuineas and the Bureau of Economic Analysis are calling for around $10 trillion in deficit reduction to get the debt back under control, as well as a ‘Super PayGo’ rule that would require any new government spending or tax cuts to be offset, twice over, by savings elsewhere.
The goal would be to bring down the annual deficits down to around 3% of GDP, which would get the debt back under that symbolic 100% mark.
Whether Washington will listen is another question entirely.
MacGuineas is clear however, saying ‘there’s no time to lose’.
