How and why a U.S. sovereign debt crisis could occur

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  • If current policies are followed, the debt will reach 82% of the #GDP by 2021, largely caused by #entitlements

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  • The #US is on an unsustainable path #debt

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  • US must choose between a stable dollar or fulfilling promised #entitlements

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How and why a U.S. sovereign debt crisis could occur

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A U.S. sovereign debt crisis is a remote possibility, but in our increasingly fragile system it could be triggered by a number of financial catastrophes-from a chaotic break-up of the Euro system to something as adventitious as a serious earthquake in California. The most likely source of a U.S. sovereign debt crisis, however, is a failure of the U.S. political system to address the growth of the major entitlement programs-Social Security, Medicare and Medicaid. That possibility is discussed in this paper. 

Peter J. Wallison is a Arthur F. Burns Fellow in Financial Policy Studies.



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