The U.S. federal budget is on a fiscal collision course with economic reality. Failing to significantly shift course threatens to undermine the vitality of the U.S. economy, the ability of the federal government to supply real public goods like national defense, and prevent the federal government from responding most effectively to unpredictable crises, such as war.

Today, I am joining the Cato Institute to do my part to prevent a severe U.S. fiscal crisis by restraining the federal budget leviathan. I’ll write and speak about federal spending, the budget process, the economic implications of rising debt, and Social Security and Medicare reform – complementing the fine work of my new colleagues Jeff Miron, Chris Edwards, and Michael Tanner. You’ll find my research here at Cato and you can also sign up to receive updates directly in your inbox, by subscribing to my free Substack: The Debt Dispatch.

The current bout of inflation is causing middle and low-income American families undue harm, forcing tough choices about what to buy and what to go without, or how much additional debt to take on to make ends meet. According to a report by the New York Fed, U.S. household debt increased to a record $16.15 trillion in the second quarter–with credit card balances rising more, as a percentage compared to last year, than they have in the preceding 20 years.

The harm from staying the current fiscal course threatens to escalate in the future. Should the U.S. bring about a self-inflicted fiscal crisis, we could face a potentially rapid downward spiral, triggered by investors losing confidence in the U.S. government’s ability to service its debt at expected value (while the U.S. government need not ever default on its debt, because it issues its own currency, severe inflation that reduces the value of every dollar issued is another means of defaulting).

Such a scenario could lead to:

• A sudden and excessive rise in interest rates that disrupts productive investment
• Hyperinflation (rapid, accelerating, uncontrollable inflation) that disrupts employment, and other markets
• Unforeseeable ramifications affecting the relative global standing of the United States as an economic powerhouse, foreign policy, and the desirability of the United States as a destination for immigrants

Washington politicians have garnered a well-earned reputation for being procrastinators. Indeed, short time horizons built into the timing of elections virtually guarantee myopia. Legislators are bound to take action when forced by either legislative deadlines with significant consequences (i.e. reaching the statutory debt limit, ceasing treasury bond issuance; or the expiration of annual spending bills, requiring a partial government shutdown) or in the midst of a crisis. But not most other times.

The big risk in waiting for a fiscal crisis to force congressional lawmakers’ hands is that it will be too late for gradual policy changes that would soften the blow by giving Americans more time to adjust. Even worse, lawmakers could find their hands tied, watching helplessly as hyperinflation unfolds and the economy buckles. It wouldn’t be the first time that a major superpower undermined its own prosperity.

The Congressional Budget Office projects a bleak outlook for the U.S. federal government’s finances. Publicly-held debt (the portion of the national debt held in credit markets, excluding intragovernmental debt such as the Social Security Trust Fund) is projected to reach 110 percent of GDP over the next 10 years—the highest level ever, even taking account of post-WWII debt levels – and to continue rising thereafter.

Under quite unrealistic assumptions of Congress allowing the middle-class tax cuts for individuals and families to expire in 2025, publicly held debt would reach 185 percent of GDP at the end of the 30-year projection period. Under more stable assumptions of revenues returning to their 50-year average instead, publicly held debt would exceed 260 percent of GDP over the same time frame.

No matter how you cook the books, U.S. fiscal policy requires a substantial course correction to stabilize the rising debt. With rising spending, primarily driven by the major entitlement programs – federal healthcare programs, especially Medicare and Social Security – being the primary culprit, benefit eligibility reforms are inevitable.

My work will primarily focus on unabashedly revealing the hard truths behind the U.S. government’s finances and the policy reforms that would restrain the budget leviathan. My goal in that endeavor is to enable the American people to flourish domestically and in peaceful trading relations with each other and the rest of the world. I am excited to pursue this objective and Cato’s broader mission to expand the understanding of public policies based on the principles of limited government, free markets, individual liberty, and peace.