Jared Bernstein:
https://www.nytimes.com/2025/07/09/opinion/debt-deficit-economy-shock.html
The sustainability of our nation’s debt is determined by three variables: the size of our annual deficits, the rate of interest on the debt, and how fast the economy is growing. …
For decades, the interest rate America paid on its debts was low relative to its growth rate. As a result, the likelihood of some dangerous event, like lenders suddenly insisting on much higher interest rates, was also low. …
But … the interest rate our country pays on its debt has increased sharply, driven in part by government spending during the pandemic and by higher inflation. It’s shot up so much that it is now equal to our growth rate. That’s a potential game changer for debt sustainability.
The Debt Is About to Matter Again
https://www.theatlantic.com/economy/archive/2025/05/trump-tax-cut-debt/682922/
When interest rates outpace growth, very bad things can happen.
https://www.nytimes.com/2025/07/09/opinion/debt-deficit-economy-shock.html
The sustainability of our nation’s debt is determined by three variables: the size of our annual deficits, the rate of interest on the debt, and how fast the economy is growing. …
For decades, the interest rate America paid on its debts was low relative to its growth rate. As a result, the likelihood of some dangerous event, like lenders suddenly insisting on much higher interest rates, was also low. …
But … the interest rate our country pays on its debt has increased sharply, driven in part by government spending during the pandemic and by higher inflation. It’s shot up so much that it is now equal to our growth rate. That’s a potential game changer for debt sustainability.
The Debt Is About to Matter Again
https://www.theatlantic.com/economy/archive/2025/05/trump-tax-cut-debt/682922/
When interest rates outpace growth, very bad things can happen.