Is The US Debt Sustainable?

The US public debt is exploding. Is the country on a path for financial ruin?

In the US, it has become the norm for the federal government to spend more than it takes in in the form of taxes. This excess is called the “fiscal deficit”. Collectively, the deficits form the US debt. The US Debt Clock indicates the current debt is sitting right around $26 trillion — and growing quickly as the US injects fiscal stimulus to combat the recent economic downturn.

This might seem like it’s a large amount — and without question, it is. The US debt has also been increasing for many years. For most of the last 70 years, the US has ran a fiscal deficit:

In 2019, the US ran a deficit of 4.6% of GDP despite unemployment below 4%. The fiscal deficit for 2020 is set to be much larger.

When measuring debt, we typically measure it as a ratio to GDP, since this represents a country’s ability to pay that debt. By this metric, the US has seen an ever-climbing national debt: