Following are two effects of US
national debt:
- Lower investment
in infrastructure: Because of the huge
debt, the US federal government has to spend a high amount of
interest to serve the loans. This leaves less amount of funds with
the government to spend on infrastructure or the social sector.
Investing in these sectors would necessitate more debts.
- Higher risk of
default: As the debt to GDP ratio increases, there will be
a higher risk of default. The US treasury securities may not be as
safe to invest. Investors might demand higher interest rate to take
more risks.