The boy who cried debt

October 8, 2024

Good morning. We’re covering the federal debt and the presidential election — as well as Hurricane Milton, Lebanon and forever chemicals.

A close-up of a small screen attached to a man’s coat pocket. The screen displays the U.S. national debt.

A badge worn by Representative Thomas Massie of Kentucky. Tom Brenner for The New York Times

In the hole

Sometime in the next two years, the federal debt will likely cross a worrisome threshold: It will exceed the size of the country’s annual economic output (or G.D.P.) for the first time since 1946.

A line chart showing the federal debt as a share of G.D.P. going from over 100 percent in the late 1940s, down to almost 20 percent in the 1970s and back up to almost 100 percent in the early 2020s.

Note: Excludes debt the federal government owes itself | Source: Congressional Budget Office | By The New York Times

The debt-to-G.D.P. ratio is merely a statistic, and nothing will inherently change when the ratio exceeds 100 percent. But it will be a sign of the country’s serious budget challenges. The large debts of the 1940s had a clear rationale: They were the price of winning a world war against a murderous fascist alliance. Today’s debt has no such simple explanation.

It instead reflects an accumulation of causes, including large tax cuts signed by Republican presidents, the continued rise in spending on Medicare and Social Security as the country ages and stimulus bills passed by both parties during the Covid pandemic and 2007-9 financial crisis. (Spending on the military, by contrast, has declined as a share of G.D.P. in recent years.)

What these causes have in common is a federal government that seems incapable of paying its own bills — and an electorate that tells pollsters it cares about the federal debt but votes for politicians who support low taxes and high spending.

How bad?

Yesterday, the Committee for a Responsible Federal Budget — a group that favors deficit reduction — released a detailed analysis of both Trump’s and Kamala Harris’s economic plans. The group acknowledged the uncertainty about the effects of those plans. Both candidates have been vague about parts of their agendas, and the economy’s performance will also have a big impact on the debt.

In the most likely scenarios, however, Harris’s plans would add meaningfully to the debt — and Trump’s would add much more to the debt. Harris has proposed a mix of spending programs focused on the middle class and tax increases on the rich that would not fully pay for her spending plans; Trump has proposed a large tax cut focused on the affluent and not nearly enough spending cuts or tariffs to pay for it.

This chart shows the central forecasts from Committee for a Responsible Federal Budget as well as its uncertainty ranges:

A chart with three lines that show the projection by the Committee for a Responsible Federal Budget of what the federal debt as a share of G.D.P. would be by 2035 in the case of current law, or 125 percent, presidential candidate Harris’s policies, or 133 percent, and candidate Trump’s policies, or 142 percent. It also shows that for each candidate there is a wide range of the projections above and below their central figure.

Note: Excludes debt the federal government owes itself | Source: Committee for a Responsible Federal Budget | By The New York Times

I know that the federal debt can be a hard topic to think about, partly because budget scolds have been warning for years that it is too large. Then it keeps growing, and nothing bad seems to happen. Those scolds can sound like Aesop’s boy who cried wolf.

But it’s worth remembering what happens at the end of that fable: Eventually, the boy was telling the truth, and a wolf really did come to eat the town’s sheep. Likewise, the federal government will eventually face consequences for spending more money than it raises in taxes.

Already, the costs of high federal debt are evident. About one-seventh of all federal spending this year will cover interest payments on debt the government previously accumulated. That’s almost as much as it will spend this year on Medicare and more than it will spend on the military. (Social Security remains almost twice as expensive as Medicare, the military or debt interest.)

Over time, interest payments will account for an even larger share of the federal budget, leaving less money for everything else. The interest payments mean that the longer the government waits to deal with its growing debt, the more painful the solution will need to be.

More tax, less spending

What are the potential solutions?

A small group of progressive economists — who favor an idea known as modern monetary theory, or M.M.T. — argue that the Treasury can simply print enough money to repay the debt. But even these advocates acknowledge that doing so could spark inflation, and the past few years have shown how damaging inflation can be, both economically and politically. M.M.T. doesn’t actually seem to be the answer.

A more plausible solution is the obvious one: Some combination of tax increases and spending cuts. And it isn’t especially hard to imagine what that combination might look like. It would need to restrain the growth of Medicare and Social Security, already the federal government’s largest budget items and growing rapidly, and it would need to raise taxes. The tax increases could be targeted at the wealthy and corporations, which have received big tax cuts in the past several decades, but they couldn’t necessarily be limited to the wealthy.

The debt, to be clear, isn’t the only long-term challenge facing the country. Climate change is a major threat, as the recent procession of hurricanes shows once again. The rise of an ambitious alliance of autocracies, including China, Iran and Russia, is also a threat. Ultimately, all these challenges overlap: The more money that the U.S. spends on interest payments, the less is available for clean energy, national defense and other priorities.

More on the election

On CBS’s “60 Minutes,” Harris was asked about the criticism that she has changed some policies in recent years. She suggested that she took more moderate positions after speaking with voters. Read takeaways from the interview.
Trump also agreed to a “60 Minutes” interview, but backed out. His campaign objected to CBS’s fact-checking and demanded it apologize for a 2020 interview with Trump.
Harris went on the podcast “Call Her Daddy.” She spoke candidly about her ambition and not having children, The Atlantic reports.
Elon Musk’s super PAC is offering swing-state voters $47 each to sign a petition in an effort to turn out Trump voters. (Trump would become the 47th president.)
Porn actors are running ads in swing states warning that Project 2025 — a governing blueprint created by Trump allies — would ban pornography and imprison people who produce it.
Harris leads Trump by 4 percentage points nationally, trails in Texas and is 13 points behind in Florida, the latest New York Times/Siena College polls find.
Trump’s huge lead in Florida suggests that the state has continued to move rightward since the pandemic, Nate Cohn explains.

THE LATEST NEWS

Hurricane Milton

Two boarded windows on a house with the words “Stay strong” and “St Pete” spray painted on the wood.

In St. Petersburg, Florida. Zack Wittman for The New York Times

Hurricane Milton rapidly intensified as it traveled through the Gulf of Mexico. It was a Category 4 storm with winds of 155 m.p.h. as it was moving toward Tampa, Fla.
Milton, like Hurricane Helene, has grown very powerful very quickly. That’s because the Gulf’s waters are abnormally hot, as this chart shows.
As the storm approaches, FEMA is stretched: More than 90 percent of its workers are responding to other natural disasters.
Milton could be the first storm in more than a century to strike Tampa directly. “We are telling people this will be like the worst hurricane in their lifetime,” a local meteorologist said.
Gov. Ron DeSantis warned that uncertainty over Milton’s precise path would lead to evacuations over a wide area.

Politics

Georgia’s Supreme Court reinstated the state’s six-week abortion ban while it considers a lower-court ruling that overturned it.
The U.S. Supreme Court turned down an appeal from the Biden administration urging the justices to allow some emergency abortions in Texas.
The Supreme Court’s new term has begun. Today, the justices will hear a case challenging the Biden administration’s restrictions on untraceable homemade firearms, known as ghost guns.
A new E.P.A. rule will require utilities to replace virtually every lead water pipe in the country within a decade. The pipes are a major source of lead poisoning.

Oct. 7 Anniversary

Kamala Harris speaks at a podium. Her husband, Doug Emhoff, beside her.

Kamala Harris Bonnie Cash for The New York Times

Harris, Trump and President Biden marked the anniversary of the Oct. 7 attack. Harris planted a tree, Trump visited a Hasidic leader’s grave and Biden lit a memorial candle at the White House.
Israel’s military campaign has left Gaza in ruins. Videos and images from before and after the war show the magnitude of destruction.
A year has passed in Israel and Gaza like a long nightmare in which hatred is the only winner, Roger Cohen writes.

MORNING READS

A model on a runway in a green coat with a fur-trimmed collar, pink tights and silver pumps.

On the Prada runway. Simbarashe Cha/The New York Times

Fashion month: Many spring collections feature ladylike clothing, suggesting “demure” may be more than just a TikTok trend.

Prime Big Deal Day: Wirecutter is sifting through thousands of discounts on Amazon. See the deals that are actually worth it.

Forever chemicals: PFAS, a harmful type of chemical, are in our water, our soil and our cookware. But there are ways to reduce your exposure.

Health: Have we reached peak human life span?

Lives Lived: Cissy Houston helped shepherd her daughter Whitney to superstardom, and was herself an in-demand backup vocalist on pop and soul records, as well as a gospel star. She died at 91.

SPORTS

An interception in the end zone. N.F.L.

N.F.L.: The Kansas City Chiefs moved to 5-0 after defeating the New Orleans Saints. Taylor Swift was there in glitter.

M.L.B.: For the first time, all four divisional series matchups are tied at 1-1 after the New York Yankees lost to the Kansas City Royals and the Cleveland Guardians fell against the Detroit Tigers.

ARTS AND IDEAS

An artwork showing a bearded Oscar Isaac leaning forward on a yellow table with a cigarette in his right hand.

“Oscar” (2024) Billy Sullivan

The idea of the “daddy” is everywhere in popular culture — not in the parental sense, but as a compliment for an attractive man. A term that began among gay men has now spread to the wider world, as a sort of award bestowed on certain celebrities: Pedro Pascal, star of “The Last of Us”; Christopher Meloni from “Law & Order.” In T Magazine, Mark Harris explores the rise of the daddies.