Growing Debt Sets Off Alarm Bells for U.S. Business Leaders
Last Updated December 3, 2024
Federal debt will soon eclipse its all-time high of 106 percent of Gross Domestic Product (GDP), which was reached just after World War II. What is worse, the nation’s debt is projected to continue rising in the future due to a structural mismatch between federal spending and revenues. Debt rising unsustainably threatens the country’s economic future, and a number of business leaders have signaled their concern.
A survey conducted at the end of 2023 by the Conference Board, a non-partisan think tank that helps business leaders navigate global and domestic issues, queried over 1,200 C-Suite executives, including 630 CEOs, about risks to the nation’s economy. As the report notes, “For US CEOs, the biggest risk is homegrown — the burgeoning US national debt. They cite ‘US national debt and deficits’ as the number one threat to business operations. . . . High national debt threatens business growth by crowding out private investment and diverting investment away from the private sector.”
Statements from high-profile business leaders also align with the survey’s findings. Larry Fink, CEO of BlackRock, wrote in his annual letter to shareholders that the debt burden in the United States “is more urgent than I can even remember.” In the same letter he stressed, “More leaders should pay attention to America’s snowballing debt.”
In an interview with Sky News, Jamie Dimon, CEO of JPMorgan Chase, said, “I think America has to be quite aware that we have to focus on our fiscal deficit issues a little more and that that’s important for the world.” Asked about a timeline for addressing the deficit, Dimon added, “The sooner we focus on it the better.”
When asked in a Bloomberg interview about what he is most worried about as CEO of Goldman Sachs, David Solomon responded, “the level of government debt.” He continued, “We need a set of policy decisions that help us deal with . . . the level of debt [and] the cost of that debt.”
Speaking with Axios, Bank of America CEO, Brian Moynihan, said, “We need our eyes and stomach aligned as a country. We’ve got to balance the budget like anybody, any company, any person, any household.” He argued that now is the time to make policy choices to reduce the debt as “we’re in relatively good times, and have been.”
Although the debt is approaching a historic level, there are many policy options available to steer our nation toward a more sustainable fiscal outlook. For example, for the 2024 Solutions Initiative, the Peterson Foundation convened seven leading think tanks to put forward comprehensive spending and revenue options that stabilize the debt and put the nation on a better path.
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Further Reading
Infographic: The National Debt Is Now More than $36 Trillion. What Does That Mean?
Although the national debt affects each of us, it may be difficult to put such a large number into perspective.
The U.S. Just Had Its Highest Deficit Outside of Major War or Recession
One of the reasons to restrain debt and maintain a sustainable fiscal outlook is that emergencies arise that may necessitate federal support.
The Fed Reduced Short-Term Rates, but Interest Costs Remain High
Higher short- and long-term Treasury rates mean that the federal government’s borrowing costs will also rise.