Rogue politicians and runaway spending risk a US debt catastrophe.

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The writer is director of economic policy studies at the American Enterprise Institute.

The US is scheduled to exceed its borrowing limit next week, but the Republicans and Democrats have not reached an agreement to raise the debt ceiling and avoid an economic and financial catastrophe.

The nation has been brought to the brink of disaster by the collision of structural problems in the economy and the political system. An agreement to raise the debt ceiling and cut certain categories of federal spending would fix the immediate crisis, but it would not address these lingering problems.

What are they? Start with the economy. There is no question that the national debt is on an unsustainable trajectory. The nonpartisan Congressional Budget Office projects that federal debt held by the public will grow as a share of annual economic output from 98 percent in 2023 to 118 percent in 2033 and 195 percent in 2053.

But the debt ceiling bill approved by House Republicans in April cut spending in the part of the budget that is already putting downward pressure on the debt. So-called “discretionary” spending, which includes education, transportation, housing assistance, and public health, is projected to decline by nearly 1 percentage point of GDP annually over the next three decades.

Meanwhile, spending on Social Security and Medicare is projected to rise as a percentage of GDP annually from 8.2% in 2023 to 10.1% in 2033 and 11.9% in 2053. These programs, in addition to increasing payments of interest on the debt, are responsible for the unsustainable path of the national debt. But there is a bipartisan agreement not to cut spending on them.

When it comes to politics, the normalization of cooling off against non-compliance combined with leaders having waning influence over their party members is a catastrophe waiting to happen. Even if President Joe Biden and House Speaker Kevin McCarthy pull it off this time, this is a tinderbox for future debt ceiling negotiations.

The hardline Freedom Caucus has pointed out that it has a very limited appetite for compromising any provision of the House bill. Chip Roy, a key House Republican, sent a memo to his colleagues this week arguing that every provision of the bill is “critical and none should be dropped solely for the sake of a ‘deal’.”

It will be an arduous task for McCarthy to convince the hardliners and agents of chaos in the House to support a compromise. His position is precarious. Any member can force a vote to remove him from office.

Can Biden deliver enough Democrats to support a deal that has enough of what the House GOP wants, so McCarthy can take it to his members? To illustrate the challenge, consider more stringent job requirements for safety net programs. These are part of the House bill, and McCarthy has called them a “red line” in the negotiations.

Biden He suggested that it might be open to modestly strengthening some requirements for able-bodied adults without dependents. But progressive Democrats have fixed that this is not a start. Could Biden find enough Democrats in the House, so many like 100 may be necessary, to support a compromise that strengthened these requirements when progressives in the party are so opposed?

The main problem is not Biden and McCarthy. it is structural. The extremist wings of both parties have increased their relative power over the centrists, partly reflecting changes in the electorate itself. Politicians facing re-election want to appear ideologically pure to avoid a challenge for their party’s nomination. They are less concerned with attracting general election voters by passing laws that reflect a bipartisan commitment. This, in turn, attracts more extremist candidates, exacerbating the problem and further weakening the control leaders have over party members.

Assuming the current crisis passes, how should Congress move forward? Address structural problems. The debt ceiling would be less of an issue if the national debt were on a downward trajectory. This will require increasing projected tax revenue and decreasing future spending on Social Security and Medicare.

Legislation in this regard should also recognize that politics is more extreme and politicians more rebellious. In the future, appropriate increases in the debt ceiling should be automatically linked to any law that increases the budget deficit.

Enacting these structural reforms would be a Herculean task. But the alternative could leave America a lazy nation that can’t pay its bills on time, sinking under the weight of its debt. The United States’ place as the world’s economic and political leader would be greatly diminished, to the detriment of the nation and the world.