The Risks of Our Growing Public Debt

Over the past 25 years, the national debt has grown significantly and it is projected to continue growing faster than the economy far into the future. Debt held by the public—the portion of federal debt held by investors, state and foreign governments, and the Federal Reserve—now surpasses $28 trillion, roughly equivalent to the nation’s entire economic output this year. The Congressional Budget Office projects that, absent action, widening deficits and growing interest on the debt will add another $20 trillion of debt over the next decade. At that rate, by 2050 debt levels will reach 155% of gross domestic product.

Economists have warned that this path poses long-term risks to the economy and to American taxpayers if left unaddressed:

Elevated interest rates as increasing federal borrowing crowds out private investments that would otherwise support jobs, innovation, and economic growth;
Inflation from high deficits, which strains budgets by driving up the costs of goods and services for families and businesses; and
Reduced public investment as rising net interest costs prompt lawmakers to reduce spending on public programs.

These consequences will reach far into the U.S. economy. From housing to health care, businesses and families will feel the strain of higher costs and a less dynamic economy. Lawmakers seeking durable solutions that invest in our workforce, maintain our economic competitiveness, and keep the nation secure in an unstable world will need to act decisively to stabilize the debt and put the federal budget on a more sustainable course.

Support Research Like This

With your support, BPC can continue to fund important research like this by combining the best ideas from both parties to promote health, security, and opportunity for all Americans.

Give Now