Source: Fortune
Summary
The U.S. national debt has reached a staggering $31.68 trillion, exceeding 100% of GDP. The Congressional Budget Office projects that if current trends continue, the debt will climb to 175% of GDP in 30 years. Historically, debt levels above 90% of GDP have led to economic growth slowing and major troubles. The interest burden on the current debt level is significant, with 36.5% of individual income taxes collected in Fiscal 2025 going towards servicing the debt. By 2036, this is projected to increase to 50.6%.
Our Reading
The numbers tell one story. The U.S. national debt is a ticking time bomb, with a projected 175% of GDP in 30 years. The interest burden is significant, with over a third of individual income taxes going towards servicing the debt.
The authors, Steve Hanke and David M. Walker, propose a fiscal responsibility amendment to the U.S. Constitution, capping debt at 110% of GDP, with gradual reductions to 90% by Fiscal 2040. They suggest a limited Constitutional convention to craft such an amendment, citing the failure of previous attempts at fiscal control. The time for action is now, before the fiscal time bomb explodes.
The strategy enters a familiar phase. Washington’s standard operating procedure has led to a staggering national debt, and the authors propose a constitutional solution to defuse the debt bomb.
Author: Evan Null
