U.S. federal debt has passed $40 trillion, while higher Treasury yields are making new borrowing and refinancing more expensive. The problem is structural rather than tied to a single annual budget: federal spending, tax policy, demographic pressures and rising debt service all affect the long-term gap between revenue and obligations. Economic growth can improve the ratio of debt to the economy, but sustained deficits can also raise future interest costs and reduce fiscal flexibility. Congress therefore faces choices about spending growth, taxes, major benefit programs and how quickly deficit reduction should occur. A debt target only becomes meaningful when people say which tradeoffs they will accept. The harder question is whether deficit reduction should fall mostly on spending, revenue, or a slower combination of both.
Which path should Congress prioritize to put federal debt on a sustainable trajectory?