The Real Danger With $26.5 Trillion of U.S. Debt
For America’s creditors, the cost of servicing our borrowings took a back seat to questions about how our government operated.
The U.S. government’s creditors are losing their patience.
Photographer: Bloomberg
As the U.S. Treasury Department’s Deputy Assistant Secretary for Federal Finance during the Obama administration, I spent a lot of time talking to the major buyers of our nation’s debt. When I left my job overseeing the government’s finances in 2017, the unpaid tab for the first 240 years of the “American Experiment” was $20 trillion. In less than four years, that number has risen to $26.5 trillion, the result of essential outlays on pandemic relief and completely non-essential tax cuts for the wealthy.
When my team and I met with the biggest buyers of U.S. debt, our conversations centered on the way in which our government functioned. The cost of servicing the debt and the structure of our portfolio took a back seat to questions about how our government operated. After the debt limit crisis’ of 2013 and 2015, our creditors focused almost exclusively on how we would correct a problematic system that turned fulfilling our financial commitments into a domestic political bargaining chip.