Two men in Bangkok were asked how a country with $40 trillion in debt and a $2 trillion annual deficit plans to cope. One said he can't say what he'll do with interest rates. The other side said the IMF doesn't know what it's talking about. Neither answer should reassure anyone who works for a paycheck.
Start with the Treasury's reply. The IMF says growth alone won't put U.S. debt on a sustainable path. Scott Bessent says growth will shrink the debt-to-GDP ratio. David Zervos answered by attacking the IMF's forecasting record. The IMF has certainly been wrong before. It spent years peddling austerity before admitting it had underestimated the damage. But "your forecasts have missed" is not an argument for the claim that we can grow our way out after cutting taxes by trillions, mostly for people who were already doing fine. That is the oldest promise in Republican economics, and it has never once paid for itself. Now the administration wants applause for the hope that this time the check clears.
The Left should be honest here, because our own habit of waving off deficits has limits. Debt is not a moral failing. Borrowing to build things, insure people and weather recessions is what a rich country is for. But interest payments are now a trillion-dollar line item that buys nothing: no school, no clinic, no bridge. Every dollar to bondholders is a dollar not spent on the public. The fix is not to gut Medicaid and food aid, which is the Republican instinct whenever the bill comes due. It is to collect revenue from the people and corporations who got the biggest breaks. A fiscal plan with no revenue in it is not serious, whatever the Treasury calls it.
Then there's the Fed. Kevin Warsh says the bank won't prejudge its meetings and that markets should watch the data. That sounds neutral. It isn't. "Data" in this context means, in large part, the labor market. When the Fed tightens to cool prices, it works by making borrowing costlier, hiring harder and work scarcer. Someone's job is the adjustment mechanism. Warsh insists central banks are all tightening together, with no free riders. Fine. But the bill for that collective virtue lands on the family refinancing a car loan, the small contractor who can't finance a truck, the young worker whose first job vanished.
The AI remarks should make this sharper. Warsh says AI could raise productivity and wealth in economies that use it well, while its short-term employment effects are uncertain. Translate: the gains are expected, the risks are someone else's. The "uncertainty" falls on workers, not shareholders. Pair a central bank willing to tolerate labor-market pain with a technology that may displace workers, and you have a policy regime that treats working people as a buffer.
What is missing from Bangkok is any acknowledgment that the administration is helping create the conditions the Fed is fighting. Tariffs are a tax on consumers that pushes prices up. Deficit-financed tax cuts pump demand while Washington demands tighter money. Then everyone acts surprised that rates stay high and interest costs balloon. One arm of government lights the fire and the other sprays working families with a hose.
The IMF's warning is not scripture. But the administration's response is not an alternative plan, only a refusal to hear one. If growth were the answer, they would show the math and fund the investments that produce it. Instead we get a shrug about rates and an insult for the referee. The country deserves a debt strategy that asks the top to pay their share, and a Fed that remembers who pays when the data says to cool things down.
How it may affect me
Higher-for-longer rates keep borrowing costs elevated for mortgages, auto loans and credit cards, while savings and CDs may pay better. Rising federal interest costs also add pressure on Congress to cut programs like Medicaid or food assistance. If you plan to borrow or refinance, assume rates won't fall soon.
