Fiscal basics

Debt-to-GDP follows one equation: it grows by r − g (real interest rate minus growth rate), plus the primary deficit. When growth beats interest, debt erodes mechanically; when interest beats growth, it compounds. Three knobs, thirty years, the whole drama of public finance.

Every "is the US debt sustainable?" argument reduces to these three knobs. Once you can read the arithmetic, the policy debates are about which way each knob is moving — not whether debt is good or bad in principle.

Real interest rate (r)

set by markets + CB

Real growth rate (g)

productivity + demographics

Primary deficit

spending minus tax revenue

If r − g < 0

debt naturally erodes

If r − g > 0

debt compounds