I know you all have a lot of things to worry about with regards to the Trump administration. Trump’s tariffs are tanking the stock market and sending consumer confidence crashing. Trump is abandoning America’s European allies in order to court Vladimir Putin. Elon Musk’s DOGE is haphazardly smashing U.S. government institutions in an attempt to root out progressive ideology. And Trump is asserting dramatic expansions of presidential power in an attempt to incarcerate protesters and deport immigrants.
But unfortunately, I have to give you one more thing to worry about, because this one is really big and important. Trump and his party are getting ready to massively increase the national debt, at a time when the existing debt is becoming increasingly unaffordable.
Before I explain why this is such a huge and imminent danger, I should issue a big caveat: Most of the existing debt problem is not Trump’s fault. Democrats and Republicans share approximately equal share of the blame. Here’s a short history of the rise in U.S. federal government debt since 1980:
You can see that most of the increase in the national debt happened in three big leaps — the first under Reagan and Bush Sr. in the 80s and early 90s, the second under Obama in the Great Recession, and the third under Trump during Covid. Overall, the long increase in U.S. government indebtedness had two main causes:
Major challenges that the U.S. government borrowed to deal with (the Cold War, the Great Recession, and Covid)
Republican administrations cutting taxes without cutting spending
In the 1990s and 2000s, the Democrats were the more fiscally responsible party, but in the Biden administration, this pattern broke down. The federal debt burden fell under Biden, but only because of the surge in inflation. Biden spent lavishly, first on pandemic relief, then on student debt relief and health care subsidies. Though the pandemic relief spending ended, the rest didn’t — and Biden didn’t even try to raise taxes in order to pay for his spending. The result was that even as the U.S. economy recovered strongly and the threat of Covid receded, Biden continued to borrow money at a rate never before seen outside of a pandemic or economic depression:
This was very foolish. At first, I didn’t worry enough about the debt in 2021-22, because A) it was being eroded by inflation, B) I expected interest rates to fall, and C) I expected the end of pandemic relief spending to bring the deficit under control. I was wrong on the second and third of these. Most worryingly, the Democrats had undergone a major shift in their underlying approach toward fiscal policy — they had gone from being a party of tax hikes to a party of unfunded spending initiatives. Belatedly, I began to realize what a big problem this was, and calling for austerity:
