Karen Dynan, former Assistant Secretary of the Treasury for Economic Policy and current professor at Harvard Kennedy School, recently joined several other prominent economists warning about the nation’s unsustainable fiscal outlook. In a chapter published in the Aspen Institute’s book, Building a More Resilient US Economy, Dynan explores the implications of the federal debt burden and the degree of change required to stabilize the national debt.

The national debt has grown dramatically over the past two decades, rising from 35 percent of gross domestic product (GDP) in 2003 to 97 percent in 2023. The increasing debt is due to a structural imbalance between federal spending and revenues. Dynan specifies three categories that will continue to exacerbate spending growth: an aging U.S. population, rising healthcare spending, and increasing interest payments. She also observes that economic factors, such as the Great Recession and the federal response to the COVID-19 pandemic, have further increased spending, while revenues are not growing at the same rate and have been reduced through legislation. Without reform, the structural mismatch between spending and revenues is projected to drive federal borrowing even higher in the coming decades, reaching 172 percent of GDP by 2054, according to the Congressional Budget Office.