U.S. Debt Crisis Looms: Harvard Economist Warns of Severe Austerityusterity Triggered by Fiscal Calamity

Breaking News: Former White House Adviser Warns of Severe Austerity as U.S. Debt Crisis Looms 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 severe austerity triggered by a fiscal calamity is the most likely solution. According to Frankel, the U.S. debt, already at 99% of GDP, is on track to hit 107% by 2029, surpassing the record set after World War II. The debt service alone amounts to over $11 billion a week, or 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. In a Project Syndicate op-ed last week, he evaluated various options, including faster economic growth, lower interest rates, default, inflation, financial repression, and fiscal austerity. While faster growth is the most appealing option, Frankel ruled it out due to the shrinking labor force, which AI will not be able to fully compensate for. He also dismissed the previous era of low interest rates as a historic anomaly and deemed default implausible given the growing doubts about Treasury bonds as a safe asset. The immediate impact of Frankel's warning is a sense of urgency among policymakers and economists. The U.S. government will need to take drastic measures to address the debt crisis, which could include severe austerity measures such as spending cuts and tax increases. The response from policymakers has been muted so far, with some calling for a more comprehensive approach to address the debt crisis. In the background, the U.S. debt crisis has been building for years, with the country's debt-to-GDP ratio steadily increasing. The COVID-19 pandemic and the subsequent economic stimulus packages have only exacerbated the problem. The growing national debt has significant implications for the U.S. economy and society, including higher interest rates, reduced government spending, and potentially even a recession. As the U.S. debt crisis deepens, the question on everyone's mind is what happens next. Frankel's warning serves as a stark reminder that the U.S. government needs to take immediate action to address the debt crisis. The options are limited, and the consequences of inaction will be severe..