The US Debt Problem Explained
US government debt is on a path economists say can't continue forever, and that's bad news for taxpayers and anyone who relies on low borrowing costs.
- The US keeps printing money and issuing more Treasury bonds to cover its spending.
- Because investors see this debt as riskier, they demand higher interest rates to keep lending to the government.
- Higher rates mean the government pays even more in interest, which forces it to borrow even more — a feedback loop that feeds on itself.
- Economists and officials agree the current path is unsustainable, even though no one knows exactly when it becomes a crisis.
- Trump wants interest rates lowered so the government can refinance its debt more cheaply and ease the pressure.
Outlook: Without lower rates or lower deficits, interest costs will keep climbing, making the debt problem harder to fix the longer it's left alone.