The Tragedy of U.S. Debt

By Kevin D. Williamson

Wednesday, August 19, 2026

 

“Borrowing dulls the edge of husbandry,” wrote the 16^th-century economist William Shakespeare, who went on to advise: “Neither a borrower nor a lender be.”

 

Americans, who like to talk about their Christian faith more than study it (“The wicked person borrows and does not repay, but the righteous one is gracious and giving”) have twice elected the self-proclaimed “king of debt,” an infamous deadbeat and serial bankrupt, as president of the United States, while entrusting the national purse strings to the control of his self-abasing toadies in Congress.

 

That’s going about as well as you would imagine.

 

In 1941, the United States was drafting men into the military and preparing for World War II, spending billions of dollars to help build the “arsenal of democracy” around the world through Lend-Lease, and the federal deficit was ... 3.82 percent of GDP. Today, the United States is trying to punt on all that “arsenal of democracy stuff,” complaining mightily about how that heavy lifting should be done by the Belgians or someone, and foundering while trying—unsuccessfully—to beat into submission the third-rate power that is Iran. And the federal deficit in 2026 is going to be something on the order of ... 5.8 percent of GDP, as the Congressional Budget Office runs the numbers. It was 5.8 percent of GDP in 2025, too.

 

Republican president, Republican Congress, Republican policies—all important factors, sure, but let us not shortchange the influence of Republican stupidity and Republican cowardice.

 

High levels of spending put upward pressure on interest rates (there is only so much money to go around, and borrowers have to compete against one another) and upward pressure on inflation (flood the economy with stupid money and prices will go up, because consumers have to compete against one another). But there are other factors that matter, factors that Donald Trump does not understand because—and this cannot be overemphasized—he is a genuine moron and an astounding ignoramus, and because nobody is willing to do the hard and thankless work of trying to explain things to him. He isn’t going to listen to me, but I’ll give it a try.

 

The Iran war is putting upward pressure on prices by disrupting the energy industry and hampering non-energy trade through the Strait of Hormuz. Trump’s genuinely imbecilic trade war is doing the same and making the overall global economy less efficient in the process, which imposes real costs.

 

High inflation rates also put upward pressure on interest rates because you don’t really want to lend borrowers money at 2 percent if inflation is at 3 percent—in real terms, you lose money on that loan, so you might as well spend that ready cash on strippers and cocaine and Corvettes rather than lend it to Uncle Stupid at money-losing rates.

 

How do you get inflation down? Traditionally, one tool in the toolbox is even higher interest rates on the private sector, achieved via Fed policy. That makes it harder for businesses and consumers to borrow money and thus taps the brakes on consumption, which is hard on the overall economy and really hard if you happen to be the single largest debtor in the history of the human race, which our federal government is. But jacking up rates also tends to bring down inflation—and it will absolutely suck while you are doing it. But once inflation is down, you at least don’t have the high inflation rate putting upward pressure on your borrowing costs.

 

Threatening to “bomb the s—t out of” Oman, a U.S. ally involved in the Iran negotiations, does not help, but, then, there is no avoiding the fact that Donald Trump is profoundly stupid. I don’t write that because it is fun: Donald Trump’s stupidity is one of the world’s most important geopolitical variables right now. It is a problem.

 

But there’s more!

 

Worldwide, there is a great deal of competition among borrowers and would-be borrowers just now. The U.S. government is not the only national government that has been running irresponsibly large deficits, and much of that government debt is being refinanced right now—by one estimate, about 80 percent of gross borrowing worldwide right now is just governments refinancing existing debt, often moving their obligations away from long-term bonds (because rates on long-term debt have been going up) to short-term instruments, which may provide some short-term interest-rate relief but increases governments’ vulnerability to interest-rate shocks since that short-term debt will have to be refinanced soon, possibly at higher rates.

 

On top of all that government borrowing, corporate borrowing is way up, too, with much of that corporate debt financing the AI data-center buildout. Those investments may turn out to be excellent long-term propositions, but $1 lent to Bubba’s Data Centers Inc. is $1 that is not available to Washington to buy missiles to shoot at random Spanish-speaking sailors in the Caribbean or to write checks to affluent old people in Florida.

 

The U.S. government could improve its finances by means of obvious policy reforms, but all of these—entitlement reform and other meaningful spending cuts, broad tax increases that will irritate the middle class, etc.—are off the table by Republican edict. Speaker of the House Mike Johnson and Senate Majority Leader John Thune—two leading candidates for the Mount Rushmore of political cowardice—would rather roll over for belly rubs from the president than do any hard work or take any real risk.

 

Republicans talk about freedom. They also talk about the Bible, but maybe somehow missed Proverbs 22:7: “The borrower is a slave to the lender.” Maybe they will listen to the Bloomberg headlines: “Global Bond Rout Sends Long-Term Borrowing Costs to Highest in Decades.”

 

It already is getting Shakespearean out there in the bond markets. Pray it doesn’t get biblical.