Important Takeaways:
- Governments owe an unprecedented $91 trillion, an amount almost equal to the size of the global economy and one that will ultimately exact a heavy toll on their populations.
- Debt burdens have grown so large — in part because of the cost of the pandemic — that they now pose a growing threat to living standards even in rich economies, including the United States.
- Yet, in a year of elections around the world, politicians are largely ignoring the problem, unwilling to level with voters about the tax increases and spending cuts needed to tackle the deluge of borrowing.
- In some cases, they’re even making profligate promises that could at the very least jack up inflation again and could even trigger a new financial crisis.
- Tackling America’s debt problem will require either tax hikes or cuts to benefits, such as social security and health insurance programs
- In the United States, the federal government will spend $892 billion in the current fiscal year on interest payments — more than it has earmarked for defense and approaching the budget for Medicare, health insurance for older people and those with disabilities.
- Next year, interest payments will top $1 trillion on national debt of more than $30 trillion
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