With government debt topping $34 trillion, America is on a financial road to ruin

Asked how he went bankrupt, one of Ernest Hemingway’s characters famously said: “Two ways. Gradually and then suddenly.”

Judging by the parlous state of our country’s public finances, we have to wonder whether something similar might be said of the United States government: On Tuesday, the Treasury Department reported that our public debt has now topped $34 trillion.

First, it is going bankrupt gradually by allowing public debt to increase year after year, no matter which political party is in control.

When Republicans have power, they like to cut taxes but both parties are loath to cut public spending.

When the Democrats are in control, they like to increase spending to push their social agenda.

Now the government risks going bankrupt suddenly as interest rates have returned to higher (more normal) levels, foreigners become reluctant to add to their large US government bond holdings and rating agencies warn, absent a change in policy direction, they’ll be forced to downgrade the country’s credit rating.