Finance Professor Says $34 Trillion in Federal Debt Could Trigger Meltdown, Derail the Next Administration

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National debt reached a record high of $34 trillion at the end of 2023, with the federal government’s total debt going up by $2.65 trillion.

A finance expert is sounding the alarm over America’s growing debt, predicting the $34 trillion burden could trigger a meltdown as early as next year if more isn’t done to curb spending.

According to Joao Gomes, a senior vice dean for research and academic initiatives at Wharton Business School at the University of Pennsylvania, the United States’ growing debt could upset global financial markets in 2025 should the next president announce a raft of expensive policies following an election win in 2024.

“The lack of concern by the media and politicians about the U.S. Federal Debt is shocking,” he said in a March 3 post on social media platform X. “We can probably live with current levels. But not with its projected increases over the next 20 or 30 years. We need to be talking about this.”

In an interview with Fortune, Mr. Gomes said the spiraling debt could “derail the next administration” and cause all sorts of issues in the market.

“If they come up with plans for large tax cuts or another big fiscal stimulus, the markets could rebel, interest rates could just spike right there and we would have a crisis in 2025,” he said.

“It could very well happen. I’m very confident by the end of the decade one way or another, we will be there.”

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U.S. national debt reached a record high of $34 trillion at the end of 2023. In a single year, the federal government’s total public debt ballooned to $2.65 trillion.

By comparison, it took the U.S. more than 200 years to cross the $1 trillion mark in October 1981.

The Peter G. Peterson Foundation, a non-partisan organization founded by a former Secretary of Commerce, Peter G. Peterson, claims the federal government currently spends more than $1.8 billion a day on interest payments alone.

Politicians Not Interested in Debt Issue

Mr. Gomes believes the spiraling debt isn’t “in the interest of either party to make it a big issue.” Still, going forward, he thinks political policies should probably be thought of in the context of affordability.

“It’s a really obvious moment in history for us to say: ‘OK, what are our choices, what can we feasibly do, who has the better plan?’ I suspect neither party is interested in that and it might all be pushed under the rug,” he told Fortune.

In recent times, Republicans have been calling for cuts to spending amid a battle over the debt limit. The limit, imposed by Congress, restricts the total amount of debt the government can hold. In the past, when nearing the debt ceiling, Congress usually raised the cap.

Regardless of who is responsible for the debt, Mr. Gomes says one party will need to step up and do something about it, because, “Toward the latter part of the decade, we will have to deal with this,” one way or another.

Mr. Gomes has been publicly sounding the alarm over the federal debt since at least February, when he declared in a Feb. 16 post on social media platform X that he probably worries “about the U.S. debt more than most of my professional colleagues.”

In his opinion, voters should be asking questions of politicians who are not taking the trillions in debt seriously.

Original News Source Link – Epoch Times

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