All the Money In the World: The Concern Over National Debt

In a recent interview with CNBC, Kenneth Rogoff, Harvard University’s Maurits C. Boas Professor of Economics and former chief economist at the International Monetary Fund (IMF), warned that the United States is hurtling toward an unavoidable debt crisis, citing concerns about annual deficits and a lack of political urgency. Rogoff cautioned that the situation may only change in the wake of a major crisis, a shock that would have significant ramifications for the United States and the global economy. As the national debt steadily grows, economists who were once relaxed about budget deficits are now alarmed.

As of Sept. 16, 2026, the U.S. national debt sits at $40,114,445,691,166.84. Since the Revolutionary War, the United States has carried some form of debt from foreign loans and war bonds; by Jan. 1, 1791, its debts amounted to over $75 million.

National debt increases when government spending exceeds tax revenue during a fiscal year, creating a deficit. Every time the government runs an annual deficit, it borrows money by selling marketable securities (such as Treasury bonds, bills, and notes) to cover the gap. Furthermore, borrowed money incurs interest. Thus, the national debt consists of borrowed money and the interest owed to investors who purchased those securities. The national debt has grown because of increased spending from major crises and emergencies (such as the COVID-19 pandemic) and federal programs like Social Security and Medicare as our population ages.

The U.S. government is projected to spend $1.039 trillion on net interest payments in the 2026 fiscal year due to the high national debt and high interest rates. Furthermore, the Federal Reserve, whose primary role is to manage the money supply and keep the economy stable, raised interest rates on Sept. 16 for the first time since 2023, signaling an intentional effort to calm an overheating economy and rampant inflation.

The Federal Reserve’s efforts suggest that the United States is not past a point of no return—especially since other countries have experienced cycles of debt and inflation and later recovered. “It’s true that many other countries in the industrialized world—you mentioned France, you mentioned Japan, you could have mentioned Italy, you could have mentioned others—are also running deficits pretty large compared to the size of their economy,” William Joseph Maier Professor of Political Economy Benjamin M. Friedman ’66 said to the “Harvard Independent.” “Americans have historically saved a smaller share of their national income.” This creates acute stress with a deficit looming over the economy. The government is expected to spend trillions of dollars on net interest payments, which absorb much of what we save.

Other experts further caution against treating America like other nations. “The concern is that when our debt is very high, the interest rates we face are already very high,” Rogoff said to the “Harvard Independent.” A debt crisis is complex and highly specific to the country being discussed.

The combination of high debt and high inflation rates can lessen the government’s borrowing power, despite the constitutional authority granted to Congress under Article I, Section 8, Clause 2 to borrow money on the credit of the United States.

The clause was written primarily to give the federal government flexibility in financing war and national emergencies. “The reason it’s good to have borrowing power is you want to be able to borrow promiscuously to borrow a lot when you face a crisis, and if you borrowed a lot during times you’re not facing a crisis, you could find yourself facing problems when you did have a crisis,” Rogoff said. High inflation and high interest rates reduce U.S. borrowing power by making credit more expensive and eroding the dollar’s purchasing power. “The debt crisis doesn’t come out of thin air,” Rogoff continued. “It comes because … [of] enormous pressure on borrowing and spending.” Thus, borrowing a lot of money when there is no dire need puts the nation at risk of an economic crisis.

The United States has turned to borrowing from abroad to cover budget deficits. “But that isn’t really a solution to the problem that just makes the United States more and more and more indebted to foreigners,” said Friedman. Ultimately, this creates an unsustainable, self-perpetuating cycle, raising the question of when debt becomes too much.

“At some stage, investors in the market, people here at home, and also foreigners will lose confidence,” Friedman explained. Friedman believes no one knows when this will happen, underscoring the need for urgency.

According to Rogoff, partisanship influences officials’ decision-making. Rogoff reflected on his long history of advocating for central bank independence and his experience with the IMF. “Contact with world leaders, with finance ministers, treasury secretaries, and my period at the IMF gave me a lot of that. And what was interesting was better understanding the pressures that the other side is on,” Rogoff said. Rogoff said independence helps insulate interest-rate and monetary decisions from short-term political pressures, which can make the economy unstable.

Rogoff also referred to power struggles between the Federal Reserve and the current Trump administration, highlighting the situation’s delicacy. For context, the recent rate hike has complicated President Trump’s goal of lowering interest rates. Competing objectives across government highlight the Federal Reserve’s need for institutional sovereignty.

“Neither political party today is prepared to make addressing the deficit problem a major priority,” Friedman stated. Deficit-cutting measures include raising taxes or decreasing spending, neither of which are politically popular, according to Friedman. With the next election cycle on the horizon, the question of whether to prioritize the national debt remains unresolved, especially as voters grow more concerned.

Rogoff offers context on how economic challenges influence daily life. Interest rates affect mortgage, student loan, and auto loan rates. This is a major consideration for families across the nation. Interest rates determine the costs and returns associated with borrowing and saving, ultimately affecting daily budgets and long-term income security.

Furthermore, Rogoff believes that the U.S. financial markets affect the entire world. “So if we’re having something that roils U.S. financial markets, it hits the whole world. That’s what happened in 2008 … the global financial crisis, which fundamentally was rooted in the United States,” said Rogoff. The 2008 U.S. financial crisis triggered a severe global economic shock, causing a worldwide freeze in credit, deep recessions, and massive losses for international banks that held toxic U.S. mortgage assets.

“I think [financial issues] are very interesting and compelling. That’s why I’m in the field … I hope people find chances to look at it,” Rogoff explained.

As the national debt continues to grow, Americans can keep a watchful eye on how elected officials and economists respond to this issue.

Hafeezat Ghaffar ’29 (hghaffar@college.harvard.edu) is comping the “Harvard Independent.”