US Debt Crisis: Tough Choices Ahead
Update: 2025-12-07
Description
The United States is grappling with a burgeoning national debt, with the publicly held debt already at ninety-nine percent of its GDP and projected to reach one hundred and seven percent by 2029. Jeffrey Frankel, a Harvard professor and former economic advisor, explores potential solutions, including faster economic growth, lower interest rates, or even a default. However, he warns that relying on inflation or financial repression would be damaging, leaving fiscal austerity as the most probable, albeit painful, solution. This would likely involve severe spending cuts, potentially eliminating nearly all defense spending or non-defense discretionary outlays. Frankel warns that austerity will likely only come after a severe financial crisis, and the longer the delay, the more drastic the necessary adjustments will be.
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