The arrival of a new presidential administration invokes new beginnings and a break from the past. Still, realities from previous administrations remain, such as a fiscal challenge that demands immediate attention. It may weigh on the newcomers even more than they realize today. We can only hope they take it more seriously than their predecessors have done.
The longstanding notion that debt accumulation is benign, based largely on interest rates that for a time fell below growth rates, has proven dangerously misleading. This flawed thinking ignored both human nature and economic reality: Politicians rarely limit borrowing to one-time emergencies (as the theory requires), and interest rates inevitably rise. Today, we face the consequences of these miscalculations.
