Concord Action welcomes a variety of viewpoints on issues related to the long-term fiscal health of the nation. The following is a guest essay written by Concord Fiscal Lookout Owen Paepke who is the author of The Evolution of Progress (named best nonfiction book of 1993 by NPR’s Talk of the Nation) and has written and spoken widely on technology and science policy. He lives in Arizona, where he practiced for many years as an attorney specializing in antitrust and intellectual property, and is a graduate of Stanford and the University of Chicago.
Experts Warn About the Looming Debt Crisis
Diagnose the cause and forecast the impact of a looming fiscal crisis unique in American history, then prescribe a cure that Washington will accept. That is the task faced by leading observers of America’s debt overload. Here are some of their observations, from across the political and economic spectrum.
Douglas Holtz-Eakin, former director of the Congressional Budget Office, has been a longtime critic of excessive deficits. In 2024, he began cautioning that debt was becoming a near-term threat. Earlier this year, he elaborated on that warning. “You get an interest rate spike; the world starts charging you a lot more interest because you are a less reliable debtor … or people stop lending to you.”
This last point is too little understood. A true debt crisis eliminates the formulaic Keynesian response to recession—borrow money and give it away or spend it directly to bolster demand—because no one will lend at any reasonable rate. In the words of Kent Smetters, an Economics professor at the Wharton School: “Once you’re in a debt crisis, you can’t just debt your way out of it.”
Holtz-Eakin explains the only remaining alternative: “You have to raise taxes sharply and quickly, and you have to have draconian cuts in spending. Discretionary spending gets slashed, and taxes go up… There’s no good news for the average American in that scenario. It’s just bad.”
When might this crisis start to unfold? Again, Kent Smetters: “It could be tomorrow. As soon as capital markets believe that Congress and the President aren’t going to get their act together, everything unravels, and it unravels very quickly.”
Ray Dalio’s 2025 bestseller How Countries Go Broke did much to raise awareness of the looming crisis. His conclusion:
“I judge the US government’s debt situation to be nearing the point of no return. … The debt and debt service levels are nearing those that cannot be reduced without great losses to debt investors because at such levels a self-reinforcing debt ‘death spiral’ occurs due to the need to borrow to service debt and due to interest rates rising because the risks of holding the debt/currency becomes apparent. … [B]ig red flags are signaling that the real value of money and debt are at great risk.” (pp. 330-33)(emphasis added).
Maya MacGuineas, President of the Committee for a Responsible Federal Budget, and Jessica Riedl of the Manhattan Institute and Brookings Institution have raised public awareness of the debt crisis. MacGuineas emphasizes the breadth and depth of potential US decline under existing fiscal policies. “We face a number of huge challenges, whether it’s competition with China, … whether it’s climate. … We don’t have the fiscal firepower to respond. We have backed ourselves into a corner. … That’s incredibly dangerous. …We risk losing our superpower status because of this issue standing in our way.” Riedl echoes this concern, but her main contribution may be her systematic debunking of the “easy solutions” so popular among issue advocates and political fringes, including the doubling of economic growth, suppression of interest rates, printing more money to pay debts (“Modern Monetary Theory,”) eradicating waste, fraud, and abuse, and “taxing the rich.” Beyond narrow limits, any of these “cures” proves worse than the disease.
This roster of experts could be extended with names like Larry Summers, Kenneth Rogoff, Jay Powell, and Jared Bernstein, but the point is clear. The nation’s most respected fiscal observers are united in warning against continuing the current deficit binges.
This alarm is spreading beyond PhDs and think tanks. Witness Nightmare on Main Street: An Oral History of the Debt Crisis that Destroyed America, from Ryan Clancy and No Labels (2026). It is future history, set in October 2029, “100 years after the start of the Great Depression–in the midst of another one.”
“The cause was clear: Investors had just collectively decided they didn’t want to buy debt from the United States of America anymore. We had become a bad credit risk.”
An economy too long founded on Washington’s deficit machine had come undone. Repercussions tore through the Treasury, then Wall Street, the Fortune 500, the Pentagon, Main Street, homes, retirement communities, and schools, leaving economic and social rubble and despair behind. Poverty spread along predictable and surprising paths.
Clancy offers a grim narrative, but altogether consistent with the warnings of the economic, fiscal, and financial experts.
Measures to head off the debt crisis all entail more tax revenue and less spending, including cuts in and narrower access to popular entitlement programs. That is no one’s favorite message, but the pain pales in comparison to the hardships inflicted by inaction.
