The Growing Concern of Federal Debt in a Shifting Economy

As the new year begins, the U.S. grapples with a daunting $34 trillion federal debt, surpassing the country’s annual economic output. This situation, a result of tax cuts by Republicans and expansive climate and health initiatives by Democrats, along with pandemic relief efforts, marks a significant shift from the previous decade. Once deemed manageable due to low interest rates and inflation, this debt is now viewed with increased concern. Moody’s recent downgrade of U.S. debt outlook to “negative” and Treasury Secretary Janet Yellen’s admission of potential sustainability issues underscore this change in perspective, echoed by economist Paul Krugman’s call for serious deficit reduction.