The Debt: Great Absentee of the American Electoral Campaign

To solve a problem, you must first acknowledge its existence. The American debt, which has reached $35,769,084,471,524 in October 2024, does not concern either of the current U.S. presidential candidates. In fact, the word “debt” has not been mentioned even once in the debate between them.

It is also absent from the official 2024 Republican platform, aside from a ridiculous notion recently concocted by Musk and Trump to create a “Department of Government Efficiency” plan that proposes slashing public spending by no less than 80%! As for candidate Harris, her program simply claims that her policies will be less costly than her opponent’s.

Yet, the diagnosis is remarkably clear: U.S. federal government spending is set to balloon irreversibly over the next 10 years due to three main factors.

Or rather, three major financial sinkholes:

Social Security, Medicare and the interest on the national debt, which will reach $1.16 trillion this year—its highest level in history.

Neither candidate wishes to challenge the first two, and neither has a solution for the third. Public agencies have even calculated that, for the first time in history, the U.S. will spend more on interest payments than on its military and defense this year. The debt-to-GDP ratio is also set to break all previous records, expected to hit around 125% in 2024.

Just because the country, its economy, and its financial markets are not in crisis does not mean we should turn a blind eye. Meanwhile, this debt has been squeezing wages and household incomes for decades. Its sheer scale is undermining the very foundations of American prosperity, much like termites gnawing away at a house, unnoticed until it collapses. No one knows if the point of no return is near.

Still, by definition, the arrival of this point—triggered by a sudden realization of the debt spiral—will wreak havoc, drain liquidity from the economy, and force massive tax hikes just to cover interest payments. The country will then have to pay more to attract creditors, initiating a snowball effect that forces the private sector to borrow at higher costs, invest less, and lay off more workers. A key indicator of this point of no return is when a country borrows just to pay the interest on its debt.

History offers plenty of examples of nations whose debt reached 200% or even 250% of their GDP, forcing them to print money and suffer hyperinflation. Weimar Germany, several Latin American nations, Zimbabwe, Lebanon… The U.S., the European Union, and the IMF swooped in to bail out countries like Greece. However, given the sheer size of the American economy, no one will ever be able to bail it out if necessary. No other economy in the world can save the U.S. from an uncontrolled debt spiral.