National debt: Why Congress no longer cares

The Federal Reserve building — The warning signals are flashing red, and if Washington continues to ignore them, "very bad things can happen"

(Image credit: Lance Nelson / Getty Images)

"Now would be a very good time for Washington to bring back its debt obsession," said Rogé Karma in The Atlantic. That's because the perfect storm for turning the federal deficit into a "genuine crisis" has arrived. In recent years, the Federal Reserve has "raised interest rates dramatically in an effort to tame inflation." Since that means the federal government has to pay higher interest on its bonds, "government payments on debt interest soared to $881 billion in 2024." That's more than the U.S. spent last year on national defense. At the same time, President Trump's tariff policies have led "almost every credible" forecast this year to anticipate slowed economic growth. Then there's Trump's "big, beautiful," and bloated budget bill, which would add "more than $3 trillion to the deficit over the next decade." The warning signals are flashing red, and if Washington continues to ignore them, "very bad things can happen," from 1970s-style stagflation to a panicked flight from U.S. Treasuries and a global financial meltdown.

So far, bond markets are showing concern but not panic, said Victoria Guida in Politico. The credit rating firm Moody's slightly downgraded the safety of U.S. bonds, and investor unease pushed interest rates on those bonds above 5%. Still, if Congress doesn't heed these warnings and "shift the trajectory" of the budget bill—which would add trillions of dollars in tax cuts "without also making politically painful spending cuts"—"something more painful" than a mild Moody's downgrade could occur.

Don't bet on lawmakers acting responsibly, said Clive Crook in Bloomberg. The 2008 bank bail-outs and Covid-related spending under both Democrats and Republicans ballooned the national debt to previously unimaginable levels—it's now $36.2 trillion. Rather than confront debt of that magnitude, all but a few remaining deficit hawks "just stopped thinking about it." Facing it would mean huge spending cuts and major tax increases, both of which are very unpopular. Instead, Republicans are now trying to hide the bill's "unfathomable cost" from voters, said Jessica Riedl in MSNBC.com. But it's the voters who will suffer as a result. The rapidly growing debt and massive interest payments create "economic drag," diverting wealth "away from the investments that would start businesses, create jobs, and raise incomes." As Washington continues to take an ostrich-like approach to the national debt, something large and unpleasant is bearing down on all of us.