The United States faces a litany of fiscal challenges, the most consequential of which is the unsustainable growth of the national debt. In a new insight, Director of Fiscal Policy Jordan Haring describes the consequences of a high and rising national debt.

Key points:

• The national debt currently equals 100 percent of gross domestic product (GDP) and is projected to grow to 119 percent of GDP by the end of fiscal year (FY) 2035 and to 156 percent of GDP by the end of FY 2055.
• Policymakers have long shown a clear unwillingness to earnestly address the nation’s debt load; since the turn of the century, policymakers from both sides of the aisle have favored enacting massive unpaid-for spending increases and tax reductions over long-term debt reduction.
• A high and rising national debt has significant consequences: slower income growth, increased interest payments on the debt, upward pressure on interest rates, reduced “fiscal space” to respond to national emergencies such as a recession or pandemic, an undue burden on future generations, and an increased risk of a fiscal crisis.

Read the analysis.