Harvard’s Rogoff warns US needs a shock to address its debt crisis

Kenneth Rogoff, the Harvard economist best known for his research on sovereign debt crises throughout history, is sounding the alarm again. This time, his message is blunter than usual: the US government’s fiscal trajectory is so broken that only a genuine crisis will force anyone to fix it. In a recent interview, Rogoff laid out the math in terms that are hard to ignore. US national debt has crossed the $40 trillion mark, the federal deficit is running at roughly 6% of GDP, and annual interest payments on that debt are closing in on $1 trillion. That last figure alone is larger than the defense budget was not long ago. The numbers behind the warning Rogoff’s core argument is structural, not partisan. Rising real interest rates are eating into the federal budget at an accelerating pace, and neither party has shown the appetite for the kind of spending cuts or tax increases that would bend the curve. Public debt now sits at approximately $32.3 trillion, a figure that represents the portion of the national debt held by investors, foreign governments, and the public rather than intragovernmental accounts. When you add in the money the government essentially owes itself, the total exce...