Federal Debt Is Soaring —

And Here’s Why It’s More Dangerous Than We Think

As we approach the 2024 election, the federal debt continues to climb, with little attention paid by the leading presidential candidates, Donald Trump and Kamala Harris. Despite promises from both sides that involve expensive programs and tax cuts, neither has offered a clear strategy for addressing the nation’s ballooning debt. This reality is captured in a recent New York Times article, “Federal Debt Is Soaring. Here’s Why Trump and Harris Aren’t Talking About It,” which highlights the growing risk as debt levels surpass 100% of GDP and interest costs begin to outpace defense spending.

Nouriel Roubini’s latest work, Megathreats, (see book report) offers a chilling backdrop to this fiscal situation. Roubini warns that unchecked debt accumulation, particularly in advanced economies like the U.S., will eventually trigger a financial crisis. He calls this the “doom loop,” where rising interest payments on debt crowd out necessary public spending and force governments into difficult financial positions, often leading to painful cuts or economic stagnation.

As the NYT article points out, current policy discussions are woefully out of sync with this looming threat. Both Trump and Harris, who were part of administrations that significantly expanded the deficit, have avoided addressing the long-term consequences of rising debt. Instead, they offer new spending promises and tax relief measures that could worsen the problem. Roubini’s analysis suggests that without a fundamental shift in how we manage our public finances, we are setting the stage for severe financial instability.

So my question is how do we find political leaders that will really address the problems facing this country rather than those who promise the world lo most everyone? Do we go along until there is a real crisis that causes significant pain similar to the 1930s? We need near term cost reduction programs, reduction in subsidies and entitlements and other substantive programs that will address the real issues identified in Megathreats.

Check out more insights from Megathreats, where Roubini lays out the interconnected risks of global debt, inflation, and political dysfunction. These issues aren’t just theoretical—they’re unfolding right now, as reflected in this sobering report from the NYT.