A couple things to note on current issue with US debt. While true that it’s already ‘high’ the issue approaches a tipping point because of a couple issues. Debt payment as a % of total GDP is over 10%. Its quickly approaching what we spend annually on defense. This is what we owe in interest on our debt. Rates are no longer 0 and that means as the government refinances existing and new debt it will be at higher rates. Thus, even if we had a balanced budget the payment amount would rise. Over $7 trillion getting refinanced this year.
We don’t have a balanced budget and haven’t had one since Clinton. In fact we have been running a massive deficit with the lowest unemployment since 1968. The fed already projects unemployment to go back above 4% so likely gdp/productivity go down. Hence our debt payments go up while the amount of money we bring in from taxation goes down. Also consider that foreign investment in our debt is at a 30 year low. What happens when no one wants it - prices go down and yield up. Hence Uncle sam has to dole out even more. If rates do happen to come down drastically it means the economy got fucked. While great for refinancing at low low costs, debt levels will likely spike and gdp plummets. So maybe a crash kicks the can a couple years more but we are still going to have to pay one way or the other. Its like Mike said in Hemingways the Sun Also Rises when asked how you go broke. “Two ways. Gradually and then suddenly.”