Yes, I think it would be fair to characterize our large debt as a ticking time bomb. Interest payments on that debt alone were $242 billion in 2009. So one problem it brings with it is that the interest payments eat up a large amount of money we could otherwise spend on useful things like repairing our crumbling bridges and highways.
We finance generation of additional money into the US money supply by selling interest-paying securities called Treasury Bills. The USA has had a vibrant, resilient economy and so T Bills have always been popular with long-term investors interested in a low-risk investment. So far, investors are still buying T-Bills when we need to raise more money to finance deficit spending. But if we get too deeply in debt, we will have to pay ever higher interest rates to attract buyers, and at some point, no rate will be enough because buyers will fear we are bankrupt and that we will be unable to make good on the treasury bills. That would force the US into national bankruptcy.
At the end of 2009. the national debt was 84.6% of the gross domestic product. That’s very high, but we’ve recovered from worse. In 1945 after deficit spending to fix the great depression and fight WWII, the national debt hit 120% of our Gross Domestic Product. We paid that debt down over the next 35 years with very high (70% and more) taxes on income over a high base amount. We can do that again. But we are paralyzed by the false claim that we can easily cut government spending enough to pay down the looming debt while cutting taxes for the rich even more.
In the past 30 years since Reagan introduced trickle-down economics and slashed taxes for the rich by more than 50%, the national debt has skyrocketed and the disparity between the amount of wealth owned by the top 1% and that owned by the other 99% has gotten far worse. Cutting government spending enough to even balance our current budget, much less pay down the staggering debt, would devastate the poor and middle class.
We won’t defuse the National Debt time bomb till most Americans understand these things, because fixing it is going to require iron political will.