Your link indicates a $1.7T deficit for FY23 which is not "less than $1T". That's roughly twice the figure you offer as " sustainable" ($700B).
It's been widely reported [1] that the US debt reached $32T in June 2023, $33T in Sept 2023, $34T January 2024, achieving those milestones roughly every 100 days. The projections indicate an exponential increase, which doesn't help the case for sustainability.
Sovereign debt and fiat ultimately are confidence games. Being unable to offer credible long-term math is a problem.
You're right, I mistook the year-to-date figure for the full-year projection.
That said,
> It's been widely reported [1] that the US debt reached $32T in June 2023, $33T in Sept 2023, $34T January 2024, achieving those milestones roughly every 100 days. The projections indicate an exponential increase, which doesn't help the case for sustainability.
These figures aren't interesting because they include debt that the government owes to itself (intragovernmental debt). The debt held by the public is presently around $27T.
When actually considering long-run sustainability, you don't just consider the real GDP growth rate (as I did above). You really need to consider several factors:
1) Deficits
2) Nominal GDP (i.e., disregarding inflation)
3) Nominal interest rates
If you have a ton of inflation, you can effectively reduce the debt burden in terms of a % of GDP, since the GDP grows with inflation and the debt does not.
You'll note an explosive increase due to the extreme pandemic deficit spending (and during the financial crisis), but lately it's actually not an "exponential increase".
The bottom line is it's not as though these are uncharted heights, or that we're presently on an uncontrolled exponential trajectory -- but, we have "run out of room", and if we have another crisis, we're going to be unable to engage in the kind of deficit spending that we have in the past without serious consequences.
Nice smooth exponential curve, debt held by public as percentage of GDP through 2053.[1] During the GFC, the projections always flattened over the long term. There's no longer even a pretense of plans to normalize. We've lived for a long time in the "no serious consequences" regime; this set of projections seems different.
This seems to have more to do with population growth projections over the very long run rather than anything that's actually going on in Congress right now.
Bottom line, our taxes need to go up modestly in the coming decades... but only if these assumptions actually prove to be true:
> Inflation slows through 2026 to a rate that is consistent with the Federal Reserve’s long-term goal of 2 percent and then remains at rates that are consistent with that goal from 2026 to 2054.
> Interest rates generally rise over the next three decades, largely as a result of projected increases in federal borrowing and in capital income as a share of total income.
... I doubt it! Look what happens to interest rates in graying countries like Japan.
It's been widely reported [1] that the US debt reached $32T in June 2023, $33T in Sept 2023, $34T January 2024, achieving those milestones roughly every 100 days. The projections indicate an exponential increase, which doesn't help the case for sustainability.
Sovereign debt and fiat ultimately are confidence games. Being unable to offer credible long-term math is a problem.
[1] https://www.cnbc.com/2024/03/01/the-us-national-debt-is-risi...