U.S. Debt Crisis: Severe Austerity Looms as Harvard Economist Warns of Fiscal Calamityity

Breaking News: Former White House Economic Adviser Warns of Severe Austerity Amid U.S. Debt Crisis A Harvard professor and former member of President Bill Clinton's Council of Economic Advisers, Jeffrey Frankel, has sounded the alarm on the U.S. debt crisis, predicting that the most likely solution is severe austerity triggered by a fiscal calamity. According to Frankel, the U.S. debt is already at 99% of GDP and is on track to hit 107% by 2029, breaking the record set after World War II. Frankel recently outlined possible debt solutions in a Project Syndicate op-ed, including faster economic growth, lower interest rates, default, inflation, financial repression, and fiscal austerity. However, he ruled out faster growth due to the shrinking labor force, stating that AI will boost productivity but not enough to rein in U.S. debt. Frankel also dismissed the previous era of low rates as a historic anomaly and deemed default implausible given growing doubts about Treasury bonds as a safe asset. The U.S. debt service alone is over $11 billion a week, accounting for 15% of federal spending in the current fiscal year. Frankel's warning comes as the U.S. debt continues to grow, with no clear solution in sight. The immediate impact of Frankel's warning is a heightened sense of urgency among policymakers and economists, who are scrambling to find a solution to the debt crisis. In the background, the U.S. debt crisis has been brewing for years, with the national debt growing from $5.7 trillion in 2000 to over $31 trillion today. The COVID-19 pandemic and subsequent economic stimulus packages have accelerated the growth of the national debt, putting pressure on policymakers to find a solution. As the U.S. debt crisis deepens, policymakers will need to consider Frankel's warning and explore alternative solutions to avoid severe austerity. The next steps will be crucial in determining the fate of the U.S. economy and the global financial system.