The drip-drip US debt crisis
Make no mistake, the US is suffering a debt crisis. It is, of course, not an acute emergency like Argentina’s multiple defaults this century or Greece’s woes in the 2010s, but it has the characteristics of a chronic disaster that everyone can see coming but the administration never does enough to avoid. The most relevant measure of US federal government debt, that held by the public, has risen from $3.4tn in 2000 to $32.3tn now, or a rise from 33.7 per cent to more than 100 per cent of GDP in just over 25 years. More importantly, the burden of servicing that debt has doubled, from 11 per cent of tax revenues in 2000 to 21.5 per cent in the first 10 months of the current fiscal year. Because long-term borrowing costs are high, the US Treasury is increasingly financing the debt with short-term borrowing and the president is again pressuring the Federal Reserve to cut interest rates to make the numbers look better. This is the slippery slope of a slow-burn debt crisis. With the US on a pa