{"id":2647677,"date":"2026-08-21T07:18:02","date_gmt":"2026-08-21T11:18:02","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/budget-red-ink-threatens-to-spike-inflation-and-unemployment\/"},"modified":"2026-08-21T07:21:02","modified_gmt":"2026-08-21T11:21:02","slug":"budget-red-ink-threatens-to-spike-inflation-and-unemployment","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/budget-red-ink-threatens-to-spike-inflation-and-unemployment\/","title":{"rendered":"Budget red ink threatens to spike inflation and unemployment"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">18<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fbudget-red-ink-threatens-to-spike-inflation-and-unemployment%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=2647677&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p>Teh national debt has recently surpassed $40 trillion, raising fears of a looming fiscal crisis that could lead to increased unemployment and inflation. Historically, concerns about growing debt and deficits have been voiced by both political parties, with debt crossing the $1 trillion mark in 1981 and remaining problematic despite brief periods of balanced budgets. Experts warn that if current trends continue, the U.S. could face a debt-driven spiral, where rising interest rates and inflation exacerbate economic instability, perhaps causing stagflation-simultaneous high inflation and stagnant growth. Such a scenario could mirror crises experienced by countries like Argentina and Greece, with severe social and economic repercussions. <\/p>\n<p>Analysts highlight warning signs, such as spikes in treasury rates, indicating market concerns over the countryS ability to finance it&#8217;s debt. Although the exact timing of a crisis is uncertain, some experts warn that neglecting the mounting debt increases the risk of a financial or inflation crisis, which could trigger widespread defaults, business failures, and unemployment. Policymakers face the challenge of implementing difficult budget reforms, including raising taxes or cutting popular programs, which is politically sensitive.The Congressional Budget Office projects the debt as a percentage of GDP could reach unprecedented levels by 2056, emphasizing the urgent need for fiscal obligation to prevent a potential economic disaster.  <\/p>\n<p class=\"readmore\">\n    <button onclick=\"showReadMore()\" id=\"readmorebtn\">Read more&#8230;<\/button>\n<\/p>\n<hr id=\"line\">\n<span id=\"more\"><\/p>\n<article class=\"fn-body\">\n<p class=\"wp-block-paragraph\">The ticking time bomb that is the <a target=\"_blank\" rel=\"noopener noreferrer\" href=\"https:\/\/www.washingtonexaminer.com\/tag\/national-debt\/\">national debt <\/a>just crossed the <a target=\"_blank\" rel=\"noopener noreferrer\" href=\"https:\/\/www.washingtonexaminer.com\/tag\/national-debt\/\">$40 trillion mark<\/a> and could spark a fiscal crisis that could throw the economy into disarray, spiking <a target=\"_blank\" rel=\"noopener noreferrer\" href=\"https:\/\/www.washingtonexaminer.com\/tag\/unemployment\/\">unemployment<\/a> and exploding <a target=\"_blank\" rel=\"noopener noreferrer\" href=\"https:\/\/www.washingtonexaminer.com\/tag\/inflation\/\">inflation<\/a>.<\/p>\n<p class=\"wp-block-paragraph\">Republicans and some centrist Democrats have long sounded the alarm about <a target=\"_blank\" rel=\"noopener noreferrer\" href=\"https:\/\/www.washingtonexaminer.com\/tag\/budgets-and-deficits\/\">growing debt and deficits<\/a>. The debt first crossed the $1 trillion mark in 1981, but lawmakers of both parties have done little to reduce debt and deficits since the temporary run of balanced budgets from fiscal 1998 through 2001.<\/p>\n<section class=\"explore-more-section\" id=\"wex-recommended-widget\">\n<div class=\"magazine-container single\">\n<h1 class=\"magazine-title mt-2\">Recommended Stories<\/h1>\n<p>             <i class=\"fa-solid fa-play icon\"><\/i>         <\/div>\n<div class=\"explore-grid\">\n<div class=\"explore-card\">                         <a href=\"https:\/\/www.washingtonexaminer.com\/news\/business\/4695074\/arizona-gop-hearing-paramount-merger\/?itm_source=parsely-api\">                             <\/p>\n<div class=\"explore-thumb-wrap\">                                                                                                                                  <\/div>\n<h3>Arizona GOP leader seeks hearing on taxpayer risk in Paramount merger case<\/h3>\n<p>                         <\/a>                     <\/div>\n<div class=\"explore-card\">                         <a href=\"https:\/\/www.washingtonexaminer.com\/news\/business\/4690169\/paramount-bond-financial-losses-warner-bros-merger\/?itm_source=parsely-api\">                             <\/p>\n<div class=\"explore-thumb-wrap\">                                                                                                                                  <\/div>\n<h3>Paramount seeks $1.88 billion bond to cover financial losses from blocked merger<\/h3>\n<p>                         <\/a>                     <\/div>\n<div class=\"explore-card\">                         <a href=\"https:\/\/www.washingtonexaminer.com\/news\/senate\/4686778\/midwest-senator-investigation-roblox-child-safety-grooming-explicit-content\/?itm_source=parsely-api\">                             <\/p>\n<div class=\"explore-thumb-wrap\">                                                                                                                                  <\/div>\n<h3>Midwest senators open investigation into Roblox allegedly putting profits over child safety<\/h3>\n<p>                         <\/a>                     <\/div>\n<\/p><\/div>\n<\/section>\n<p class=\"wp-block-paragraph\"><a target=\"_blank\" rel=\"noopener noreferrer\" href=\"https:\/\/www.washingtonexaminer.com\/in_focus\/4688100\/the-deficit-explained-what-it-is\/\"><strong>THE DEFICIT, EXPLAINED: WHAT IT IS, WHY IT\u2019S GROWING, AND HOW TO FIX IT<\/strong><\/a><\/p>\n<div class=\"wex-inarticle-ad wex-inarticle-ad-art-dsk-inart-1\">\n<div class=\"wex-ad-wrap wex-ad-art-dsk-inart-1\" style=\"min-height:90px\"><span class=\"wex-ad-label\" hidden>Advertisement<\/span><\/p>\n<div id=\"div-gpt-ad-3182201-15\" data-wex-ad=\"art-dsk-inart-1\"><\/div>\n<\/div>\n<\/div>\n<div class=\"article-paywall\">\n<p class=\"wp-block-paragraph\">Now, some are warning that the burden of that debt could spark a spiraling crisis that would affect everyone.<\/p>\n<p class=\"wp-block-paragraph\">Former Rep. Carolyn Bourdeaux, who is now the executive director of the Concord Coalition, which focuses on balancing the budget, told the <em>Washington Examiner<\/em> that there is a \u201cfailure of imagination\u201d among most analysts where they simply can\u2019t imagine a scenario in which Congress \u201cabsolutely fails to act in the teeth of a crisis, or the bond market fails to respond to a potential crisis.\u201d<\/p>\n<figure class=\"wp-block-image size-large is-resized\">An electronic display shows the national debt in Washington, D.C., on Aug. 19.  (Mandel NGAN\/AFP via Getty Images)<\/p>\n<p>&#8221; data-large-file=&#8221;https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/\/2026\/08\/localimages\/WB.Biz_.082626.jpg?w=696&#8243; height=&#8221;658&#8243; width=&#8221;1024&#8243; &#8220;https:><figcaption class=\"wp-element-caption\">An electronic display shows the national debt in Washington, D.C., on Aug. 19.  (Mandel NGAN\/AFP via Getty Images)<\/figcaption><\/figure>\n<p class=\"wp-block-paragraph\">Bourdeaux, a Georgia Democrat who represented an Atlanta-area district from 2021 to 2023, noted the potential for a death spiral of sorts when it comes to debt and interest rates \u2014 something that could result in massively deleterious effects for the economy and consumers.<\/p>\n<div class=\"wex-inarticle-ad wex-inarticle-ad-art-dsk-inart-2\">\n<div class=\"wex-ad-wrap wex-ad-art-dsk-inart-2\" style=\"min-height:90px\"><span class=\"wex-ad-label\" hidden>Advertisement<\/span><\/p>\n<div id=\"div-gpt-ad-3182201-16\" data-wex-ad=\"art-dsk-inart-2\"><\/div>\n<\/div>\n<\/div>\n<p class=\"wp-block-paragraph\">\u201cIf we have to issue more debt or print money, that will then cause the interest rates to go up further, which then causes us to have to print money or issue debt to cover those interest payments,\u201d she said. \u201cWe get into a spiral of both inflation and rising interest rates. So stagflation, which has the potential to be a disaster for the economy.\u201d<\/p>\n<p class=\"wp-block-paragraph\">Stagflation is seen as one of the worst economic scenarios that could play out. Stagflation, a portmanteau of stagnation and inflation, is when prices are rising while economic growth and the labor market are languishing.<\/p>\n<p class=\"wp-block-paragraph\">Bourdeaux said one could look to other countries that have experienced crises in the past.<\/p>\n<div class=\"wex-inarticle-ad wex-inarticle-ad-art-dsk-inart-3\">\n<div class=\"wex-ad-wrap wex-ad-art-dsk-inart-3\" style=\"min-height:90px\"><span class=\"wex-ad-label\" hidden>Advertisement<\/span><\/p>\n<div id=\"div-gpt-ad-3182201-17\" data-wex-ad=\"art-dsk-inart-3\"><\/div>\n<\/div>\n<\/div>\n<p class=\"wp-block-paragraph\">\u201cThe causes that led to the crisis are different, but it is possible that the experience would be the same in countries like Argentina, or Greece, or Turkey, where they experienced inflation not at 3% a year, but at 100% a year or higher,\u201d the former congresswoman warned.<\/p>\n<p class=\"wp-block-paragraph\">Inflation clocking in at 100% might seem unimaginable to consumers and would disproportionately hurt salaried workers \u2014 those largely dependent on investment income would be better able to weather such a crisis, Bourdeaux said.<\/p>\n<p class=\"wp-block-paragraph\">For instance, if someone is earning $100,000 before, with 100% inflation, that same person would need to have their salary doubled to $200,000 just to keep up their status quo.<\/p>\n<div class=\"wex-inarticle-ad wex-inarticle-ad-art-dsk-inart-4\">\n<div class=\"wex-ad-wrap wex-ad-art-dsk-inart-4\" style=\"min-height:90px\"><span class=\"wex-ad-label\" hidden>Advertisement<\/span><\/p>\n<div id=\"div-gpt-ad-3182201-25\" data-wex-ad=\"art-dsk-inart-4\"><\/div>\n<\/div>\n<\/div>\n<p class=\"wp-block-paragraph\">\u201cThe people who struggle to weather it are those who have to renegotiate their salary, renegotiate their pay on a regular basis,\u201d she said. \u201cIt\u2019s much stickier and much more difficult to keep up. Anything held in cash will be degraded.\u201d<\/p>\n<p class=\"wp-block-paragraph\">Desmond Lachman, a senior fellow at the American Enterprise Institute, told the <em>Washington Examiner<\/em> that there have recently been some warning signs about the situation that have gone along with that $40 trillion milestone. For instance, the 30-year Treasury rate recently spiked to the highest level since 2001.<\/p>\n<p class=\"wp-block-paragraph\">\u201cSo markets are beginning to say, you know, what\u2019s going on? That these guys can\u2019t finance themselves \u2014 this is just a whole big Ponzi scheme,\u201d he said. \u201cSo you\u2019ve got a lot of signs that there\u2019s already trouble brewing.\u201d<\/p>\n<div class=\"wex-inarticle-ad wex-inarticle-ad-art-dsk-inart-5\">\n<div class=\"wex-ad-wrap wex-ad-art-dsk-inart-5\" style=\"min-height:90px\"><span class=\"wex-ad-label\" hidden>Advertisement<\/span><\/p>\n<div id=\"div-gpt-ad-3182201-26\" data-wex-ad=\"art-dsk-inart-5\"><\/div>\n<\/div>\n<\/div>\n<p class=\"wp-block-paragraph\">And the situation is even more complicated in that there is no clear timeline for when a crisis might occur.<\/p>\n<p class=\"wp-block-paragraph\">\u201cOne of the scariest things about worst-case scenarios is it\u2019s impossible to say how close we are to a crisis,\u201d David Ditch, a policy analyst at the Cato Institute, told the <em>Washington Examiner<\/em>.<\/p>\n<p class=\"wp-block-paragraph\">Ditch said he doesn\u2019t consider a worst-case crisis an immediate threat, like in the next year or so, but the odds go up over time.<\/p>\n<h2 id=\"h-war-gaming-fiscal-disaster\" class=\"wp-block-heading\">War-gaming fiscal disaster<\/h2>\n<p class=\"wp-block-paragraph\">What exactly a fiscal crisis might look like, and the severity of such a crisis, is not possible to predict. The Committee for a Responsible Federal Budget <a target=\"_blank\" rel=\"noopener noreferrer\" href=\"https:\/\/www.crfb.org\/papers\/what-would-fiscal-crisis-look\">released<\/a> a paper analyzing various crisis scenarios, including a financial crisis, an inflation crisis, an austerity crisis, a currency crisis, a default crisis, and a gradual crisis.<\/p>\n<p class=\"wp-block-paragraph\">Of crucial note, the CRFB said several of these crises could happen simultaneously, which would be even more disastrous for consumers.<\/p>\n<p class=\"wp-block-paragraph\">In the case of a financial crisis, the group warns that high and growing debt could degrade investor confidence in the country\u2019s fiscal outlook and cause interest rates to spike, which could then \u201cset off a panic,\u201d further exacerbating the crisis and hurting financial markets.<\/p>\n<p class=\"wp-block-paragraph\">\u201cThis could lead to a series of cascading failures at financial institutions, which could have ripple effects across the economy \u2014 making it difficult for individuals and businesses to make payments or receive loans and sparking a wave of defaults, rising unemployment, business failures, and foreclosures,\u201d the paper reads.<\/p>\n<p class=\"wp-block-paragraph\">The CRFB said in the \u201cmost extreme case\u201d of trying to avoid a financial crisis or default without addressing the underlying debt, the Federal Reserve or government could monetize the debt, essentially printing money to finance the debt. That could lead to spiraling inflation.<\/p>\n<p class=\"wp-block-paragraph\">An inflation crisis could result in businesses shuttering and unemployment rising. Such high inflation, as has been seen in other countries, could also have escalating noneconomic side effects.<\/p>\n<p class=\"wp-block-paragraph\">\u201cThese types of crises typically go hand in hand with enormous social and political unrest,\u201d Bourdeaux said.<\/p>\n<p class=\"wp-block-paragraph\">Stagflation could become a reality, featuring high unemployment and explosive inflation.<\/p>\n<p class=\"wp-block-paragraph\">For a long time, economists did not think stagflation was possible because they believed that higher inflation could be traded off for lower unemployment. The notion of high inflation being married to low unemployment and vice versa was turned on its head in the 1970s when both high inflation and stagnating growth occurred simultaneously, causing pain for consumers.<\/p>\n<p class=\"wp-block-paragraph\">Ditch said it is very challenging to predict what the consequences of all of this might be and what a worst-case scenario might look like, but he pointed out that consumers are already experiencing higher borrowing costs, and in a crisis, those could shoot higher.<\/p>\n<p class=\"wp-block-paragraph\">That would mean credit card balances going up, mortgage costs shooting up, and making homebuying more challenging.<\/p>\n<p class=\"wp-block-paragraph\">\u201cIt\u2019s going to be a lot harder to borrow money to start a new business, harder to borrow to expand a business, and if you make it harder for businesses to get the capital they need, that\u2019s going to mean fewer job openings,\u201d Ditch said.<\/p>\n<p class=\"wp-block-paragraph\">Ditch also warned about the possibility of spiraling inflation. Inflation hit a recent multidecade high of nearly 9% in June 2022 and is still the No. 1 concern for voters four years later.<\/p>\n<p class=\"wp-block-paragraph\">\u201cWhat people perceive as a cost-of-living problem right now could spiral into a cost-of-living crisis that we experienced to a certain extent in 2021, but on a more prolonged basis back in the 1970s,\u201d he added.<\/p>\n<p class=\"wp-block-paragraph\">The Congressional Budget Office, Congress\u2019s nonpartisan scorekeeper, has been warning about the severe consequences of not addressing the growing national debt for years.<\/p>\n<p class=\"wp-block-paragraph\">In February, the CBO projected that federal debt held by the public would reach 101% of GDP this year. By 2030, debt will exceed 108% of GDP, surpassing the all-time high during World War II. The CBO said debt is projected to be 175% of GDP by 2056.<\/p>\n<p class=\"wp-block-paragraph\">In its <a target=\"_blank\" rel=\"noopener noreferrer\" href=\"https:\/\/www.cbo.gov\/publication\/62105\">report<\/a>, the CBO warned of \u201cfar-reaching implications\u201d if debt continues to grow faster than the country\u2019s GDP. It said one of the consequences could be another financial crisis.<\/p>\n<p class=\"wp-block-paragraph\">\u201cThe risk of a fiscal crisis \u2014 that is, a situation in which investors lose confidence in the value of the U.S. government\u2019s debt \u2014 would increase,\u201d the report reads. \u201cSuch a crisis would cause interest rates to rise abruptly and other economic and financial disruptions to occur.\u201d<\/p>\n<p class=\"wp-block-paragraph\">And to stave off a crisis, experts say the government and Congress would have to get serious about trying to balance the budget.<\/p>\n<p class=\"wp-block-paragraph\">The situation is tricky for lawmakers because if they were to make tough decisions, such as raising taxes or dramatically cutting spending on popular programs to balance the budget, they could face the threat of having that used against them by a political opponent and being voted out of office.<\/p>\n<p class=\"wp-block-paragraph\"><a target=\"_blank\" rel=\"noopener noreferrer\" href=\"https:\/\/www.washingtonexaminer.com\/policy\/finance-and-economy\/4690487\/housing-market-prospects-year-ahead\/\"><strong>\u2018SLOGGING ALONG\u2019: PROSPECTS FOR THE HOUSING MARKET IN THE YEAR AHEAD<\/strong><\/a><\/p>\n<p class=\"wp-block-paragraph\">\u201cAnybody serious in Washington knows that this is going to require both expenditure cuts and revenue increases, and you can see the problem there,\u201d Bourdeaux said. \u201cNobody wants to put any of those kinds of ideas on the table \u2026 even though everybody behind the scenes, behind closed doors, understands that this is necessary.<\/p>\n<p class=\"wp-block-paragraph\">\u201cSo what we need is to convey to people how very serious a problem this can become, very quickly, if we don\u2019t address it.\u201d<\/p>\n<p class=\"wp-block-paragraph\"><em>Zach Halaschak (@zhalaschak) is the economics reporter for the <\/em>Washington Examiner<em>.<\/em><\/p>\n<\/div>\n<\/article>\n<p><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>US debt hits $40T, risking crisis, inflation, and unemployment<\/p>\n","protected":false},"author":3360,"featured_media":2647678,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/www.washingtonexaminer.com\/wp-content\/uploads\/2026\/08\/WB.Biz_.082626.jpg?w=696","fifu_image_alt":"","footnotes":""},"categories":[33651],"tags":[42875,58165,38510,84486,84487],"class_list":["post-2647677","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-western-journal","tag-budget-deficit","tag-economic-stability","tag-fiscal-policy","tag-inflation-risk","tag-unemployment-impact"],"fifu_image_url":"https:\/\/www.washingtonexaminer.com\/wp-content\/uploads\/2026\/08\/WB.Biz_.082626.jpg?w=696","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2647677","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/3360"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=2647677"}],"version-history":[{"count":3,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2647677\/revisions"}],"predecessor-version":[{"id":2647681,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2647677\/revisions\/2647681"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2647678"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=2647677"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=2647677"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=2647677"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}