The federal debt

Matthew Rose, NY Times - The U.S. federal debt is very large. Last I checked, it was more than $36 trillion, which under the Rule of Large Numbers is hard to fathom. Written out in full, it’s $36,218,617,145,302. If it were divided among every American, we’d each owe $106,000. As a percentage of the economy, the only time it was ever higher was at the end of World War II, and barely. In the coming years, it’s projected to zoom past that level.

It’s true that hand-wringing about the country’s debt is an American pastime. The economist Rebecca Patterson noted recently that the Federal Reserve chairman Alan Greenspan sounded the alarm 37 years ago, when the debt level was a toddler compared to today. Peter R. Orszag, President Barack Obama’s budget director, admitted he used to tune out “worrywarts carping about deficits.”

Today, though, feels different. Last month Moody’s became the final major credit-rating company to declare the U.S. debt no longer pristine. Long-term rates are rising as investors demand more to compensate for the risk of holding Treasuries.

The crucial element, writes the Columbia historian Adam Tooze in an Opinion guest essay, is the debt’s “vertiginous novelty.” Never before in modern times has a growing economy not facing crisis or war or social upheaval ever accumulated debt on this scale — or failed to pay it back. That’s because most political elites have been austerity hawks of one sort or another. What should worry us the most, Tooze writes, is not only the size of America’s fiscal bloat but also its strangeness.