Our Best Stuff on Crossing the $40 Trillion Debt Threshold

Turn any article into a podcast. Upgrade now to start listening. Members can share articles with friends & family to bypass the paywall. You’re reading The Weekly, a Saturday morning recap of the best Dispatch content of the week, with some additional commentary from Managing Editor Rachael Larimore. Hello and happy Saturday. The U.S. has crossed a troubling threshold—our national debt now stands at $40 trillion. That’s enough money to buy about 70 percent of all homes in the United States. If that sounds like too much dusting and vacuuming, one could instead buy the 10 biggest companies in the U.S.—Nvidia, Apple, Amazon, Alphabet (Google), Microsoft, chipmaker Broadcom, Meta, SpaceX, Tesla, and Eli Lilly—and have almost $12 trillion left over. To look at it another way, that $40 trillion works out to roughly $297,000 worth of debt for every household in the United States. And it comes out to between seven and eight years’ worth of tax revenue collected by the IRS. How did we get here? Kevin Williamson offered up an excellent history-slash-explanation on The Dispatch Podcast. He points out that tax revenues as a percentage of GDP have remained steady since World War II—at about 15 percent of GDP—but how we’ve chosen to spend that money has changed. Back then it was 80 percent on defense and 20 percent on everything else. Now interest on the debt alone accounts for almost 20 percent, defense spending is another 20 percent, and the rest goes mostly to entitlement programs. He also explains that the high interest rates we’ve seen in recent years are part of the problem: One of the reasons the interest rates have gone up has to do with overall market conditions, but another reason they’ve gone up has to do with the size of the debt itself. As we get more and more debt, we have to compete more against lenders to get that money, and also the less sustainable our situation looks. And so lenders want higher interest rates to make up for that risk. Kevin’s comments hint at the interplay between the debt and interest rates; contributing writer Jessica Reidl goes a little deeper on the problem. Get ready for a debt-interest rate spiral, she warns. Here’s what that looks like: Structural deficits and elevated rates keep federal debt climbing. Financing that debt requires the government to borrow heavily every year, which pushes rates up further. Higher interest costs swell the debt, forcing still more borrowing and still higher interest rates. Eventually financial markets recognize that a spiral is underway and, fearing default or monetization, demand even higher rates to compensate for the risk. At that point the government is borrowing destabilizing sums at punishing rates simply to cover the interest on its earlier borrowing. Such spirals have happened elsewhere, from Greece’s cascade of bailouts to Argentina’s serial defaults to Sri Lanka’s 2022 collapse. Sure, the United States is not Greece and is unlikely to experience these scenarios in full. Yet even the tools meant to avert them inflict real economic damage. The rosiest outcome is that, as rates climb and deficits approach 10 percent of GDP, lawmakers finally heed the bond market and enact fiscal reforms to slow borrowing. Riedl also wrote about one measure that Treasury Secretary Scott Bessent has taken—announcing that the Treasury would buy back some longer-term bonds “to assure investors that they can safely buy long-term bonds at modest interest rates because the Treasury stands ready to intervene on behalf of their confidence,” as she explained. But that announcement hasn’t exactly moved markets. For an in-depth look at Bessent’s buy-back plan, check out Monday’s Morning Dispatch. If only there were a politician with some ideas about how to tackle this problem. Someone like, say, former Speaker of the House Paul Ryan. Way back in 2011, Ryan laid out a serious proposal for entitlement reform, which he dubbed The Path to Prosperity. The response from the left was to accuse him of trying to “throw Granny off a cliff.” Since Ryan left Congress in 2019, the national debt has doubled. Ryan is no longer a lawmaker, but he hasn’t given up on fiscal conservatism. And he’s even still a little optimistic. Michael Warren interviewed Ryan for our new newsletter Next Right (sign up here!), and they discussed the debt problem. Mike writes: The problem infecting our politics, Ryan said repeatedly during our 40-minute conversation, is populism, which in its various iterations offers seemingly easy and cheap fixes to problems that require tough choices and sacrifice. That irritable gesture continues to dominate both the Republican Party and, via its current love affair (or hostage situation—take your pick) with the Democratic Socialists of America, the Democratic Party. Ryan wouldn’t criticize anyone by name, but he expressed no solidarity or common cause with the populists in his own party. He maintains that the reforms of Social Security and Medicare he pushed while he was chairman of the House Budget Committee during the Obama administration were not only a necessary fix to the problems facing the federal budget but were politically sellable, with House Republicans voting for a budget that incorporated those reforms for four straight years while maintaining their majority. Elsewhere, executive editor Michael Reneau remembered Dolly Parton, Nathan Beacom wrote about vice and virtue, and Shiv Parihar reports from Kyiv on the occasion of Ukraine’s Independence Day. Thanks for reading and have a lovely weekend. That’s another thing about Dolly. She conjured up her rhinestone-studded, glamor-trash look in part because even as a little girl she wanted to get dolled up in the makeup she couldn’t afford and that her religious parents didn’t abide, but we were all in on the bit with her. Part of the churn of social media clips Tuesday afternoon included countless TV appearances of Dolly making fun of her looks. In a 1995 appearance on Late Show with David Letterman, doing his famous Top 10 bit, she blurted out her No. 1 pet peeve: “Nobody notices I’ve got a great ass, too.” The audience ate it up. Even her take on the Happiest Place on Earthast Tennessee, the Dollywood theme park, is a bit of us being in on the joke with her. A few Christmases ago, we gave our kids season passes to Dollywood (I did not play the Christmas album for them, but they heard it at Grammy and Grandpa’s plenty). If you haven’t been, you should know: The kitsch is thick. Don’t get me wrong—there’s a reason some travel publications give it higher marks than Walt Disney World in some categories. But there’s just enough Appalachian nostalgia and charm to serve as a wink, a hit-you-in-the-face aesthetic of idyllic mountain scenes and retro diners and cars accented with fins and chrome. … But if you walk around and take it all in hearing Dolly’s chuckle, you know you’re in on it all with her, believing it’s the kind of place befitting a girl who dreamed bigger than the hollers but who never forgot them. Suppose that, in order to start a public conversation on a topic you consider important and insufficiently discussed, you felt it was necessary to invent a salacious story in order to rile up public passions. Suppose you made up a story that immigrants were stealing and eating people’s pets in order to start a conversation on immigration. For a virtue ethicist, a good end and a good intention (supposing, for the sake of argument, that prompting a public discussion of border security is the good being aimed at) cannot justify an act that is in itself bad, in this case the act of lying and the act of slander. Cicero, in his great work De Officiis, had harsh words for those who imagined that political expedience could be disconnected from moral standards. “Bad men,” the Roman statesman wrote, “are accustomed, in considering any question, to weigh the morally right against what they think is expedient; good men are not.” For a good man, there is no question of the politically expedient trumping the morally right. For Cicero, the answer is easy: “It is the error of men who are not strictly upright to seize upon something that seems to be expedient and straightway to dissociate that from the question of moral right. … Away, then, with questioners of this sort for their whole tribe is wicked and ungodly.” We sometimes seem to think that we can deceive, massage the truth, manipulate, propagandize, tolerate corruption, and sow division so long as, at the end of the day, we win political influence and push our policies through. But you can see how this becomes a race to the bottom indeed, as competing factions with competing ends concur only on the underhanded means they will use to achieve victory. On the eve of Independence Day, young people filled the 1818 Rooftop Bar in Kyiv’s hip Podil neighborhood to watch the sun set. Under the establishment’s purple lighting, one table was disappointed to learn that there were no Bloody Marys. Within moments, sirens began to blare and Telegram channels erupted into action: 10 S8000 Banderol cruise missiles were hurtling toward Kyiv. The rest of my table, seasoned expats, laughed at the fact that I had the sound on for attack notifications. Customers cleared their notifications and returned to bar chatter. More phones chimed: drones on the way. A rooftop bar seemed like the worst place to be, but no one bothered to leave. The Ukrainians I spoke to, particularly the young ones, said they had gotten used to the war’s effects on their lives. Almost none go to bomb shelters in response to regular threat alerts. To do so would mean sacrificing hope for a full night’s sleep in perpetuity. Sasha, a student, told me she takes shelter for ballistic missiles but not for attacks by Shahed drones. When the threat of a ballistic attack recedes, she “goes back to having fun.” … Aside from the sirens, only men’s military shirts and occasional broken arms or burnt faces betray the presence of war. “When we work, when we dance, we forget about the war,” a young man named Ruslan told me outside of a nightclub on Independence Day weekend. Best of the Rest Rachael Larimore is a managing editor of The Dispatch and is based in the Cincinnati area. Prior to joining the company in 2019, she served in similar roles at Slate, The Weekly Standard, and The Bulwark. She and her husband have three sons.