The elephant in the room that is getting some minor attention is the Federal debt levels that have skyed higher since 2020 at $23 trillion to 2025 at $36 trillion. Obviously, this rate of change is unsustainable. Or is it that simple?
The level of debt per se is really not the issue. Think of your own situation. When younger your debt amount to buy that first car versus your income to pay for it was substantially different that when you get older (hopefully).
As you age, your income levels should increase (hopefully) and thus debt coverage.
The point is that what is import is not the level of debt, but rather the ability to service that debt.
So also, for the Federal debt level, it must be more important to ask, what is the ratio of debt to Gross Domestic Product (GDP), which is basically the country’s as a whole “income”.
To be sure, the ratio has also risen from 2020 at 107% to 2025 119%. But this is down from COVID levels in mid 2020 at 133%.
Government debt levels may be rising, but so is GDP, our ability to pay the debt.
It is still not a good situation with the ratio near historic highs, but neither is it too alarming, yet.
I say “yet” because hhat’s different this time is that historically, what has happened is during a crisis like war or COVID, debt levels would, rightly so, increase to handle the crisis, while GDP may go sideways or down.
This may also be when tax rates come into the picture.
In boom times, GDP would increase, debt levels should remain the same or slightly increase, but again, the ratio might decrease. This is so especially if tax rates increase. When better to raise tax rates than during boom times?
Instead, over the past eight years, GDP has increased, but debt increased faster. And taxes remain the same to lower as a whole. Thus the rise in the ratio. Thus the worry about our future.
So, the elephant is there, getting nervous, stomping its feet for attention, begging for a solution, but has not charged yet.