As the Senate takes up the “One Big Beautiful Bill” (Donald Trump’s name for it) passed by the House, there’s finally some discussion of the national debt. That’s because the bill is estimated to add $3.8 trillion over the next decade to the current debt: $37 trillion, or more than 120% of U.S. GDP.
The bond markets have been shouting their disapproval. Bond investors are demanding higher yields because they’re starting to doubt that we can be trusted to pay off our obligations. Interest on the debt in fiscal year 2025 will exceed spending on defense, Medicare and Medicaid. By 2035, it’s projected to overtake everything but Social Security.
Rather than indulge in the usual punditry about Republican and Democratic hypocrisy and spending misfeasance, I want to pull back the lens a bit. We can’t let Congress off the hook, but it’s worth asking whether our problems are more structural than the Washington-centric story about cowardly politicians suggests.
The phrase “demography is destiny” is overused and abused, but there’s some truth to it. Consider Thomas Malthus. In “An Essay on the Principle of Population” (1798), the pioneering economist identified what came to be known as the “Malthusian trap.” In prosperous times, population grows geometrically but food supplies increase only arithmetically. More babies lead to fewer resources per person, eventually causing a population crash. Malthus gets a bad rap because he was broadly right retrospectively but profoundly wrong prospectively. In other words, he offered a serviceable rule of thumb about how demographics and economics had worked for thousands of years at the precise moment that rule was hitting its expiration date. Since 1800, humans have figured out how to increase food supplies to far outpace increases in population.
But if you were a policymaker in 1800, you’d have been a fool not to take Malthus seriously. The problem today, unlike in 1800, is that we’re in uncharted territory when it comes to the population-and-resources calculation. No society has gotten so rich and so old amid such a crash in fertility rates as ours. And while our debt is driven by many factors, it is the cost of entitlements, particularly for the elderly, that is by far the most serious across much of the rich world.