Swagel doesn’t subscribe to the notion that the U.S. will face a crisis of its own making. His justification is simple: He was at the Treasury during the 2008 financial crisis, and joined the CBO months before the COVID pandemic began. He has watched as the U.S. economy, seemingly against all odds, has clawed its way out of economic crises before.

That’s not to say Swagel isn’t a staunch advocate of setting the U.S. on a more sustainable fiscal path—rather, he trusts the people in power to do so when the time comes.

Why the optimism?

Among those concerned about national debt are notable names: JPMorgan Chase CEO Jamie Dimon, Federal Reserve Chairman Jerome Powell, and Bridgewater Associates founder Ray Dalio. Tesla CEO Elon Musk is also worried about federal spending and has endorsed a plan floated by Berkshire Hathaway founder Warren Buffett that would render members of Congress ineligible for reelection if they allow deficits to exceed 3% of GDP.

On the other hand, optimistic economists suggest that, despite the value of the debt, it’s not actually an issue: the bond market is holding steady, indicating a reliable market of buyers. Likewise, the U.S.’s own central bank buys huge swaths of the debt, meaning, in the simplest of layman’s terms, the economy can essentially print its own money. There are holes in this argument, not least the fact that Fed chairman nominee Kevin Warsh has suggested he would like to reduce the Fed’s balance sheet and may therefore be less inclined to finance borrowing.

Swagel’s positive outlook doesn’t rely on the argument that a crisis hasn’t happened yet, so therefore it never will: “[My optimism] is rooted in my experience,” Swagel tells Fortune in an exclusive interview in Washington D.C. “First being at Treasury during the financial crisis and seeing very difficult times and the country coming together with an effective response—not saying it’s perfect, lots of controversy—but it was effective.”

“The second thing is policymakers are smart, they’re thoughtful. Interacting with members of Congress makes me optimistic. I know you read about all the squabbles … I’m completely aware of this, but the policymakers that are thinking about these things are thoughtful and effective. Not necessarily always effective at passing legislation, but that’s part of our political system, it was set up to make it difficult ot pass legislation.”

Decisions on the horizon

Swagel’s optimism that Congress will be pushed into action will be tested sooner rather than later, likely at some point in the next six years, he told Fortune. This is partly due to the fact that, according to the Committee for a Responsible Federal Budget (CRFB) both Social Security and Medicare will become insolvent within that time period.

“Making progress to address the fiscal trajectory would be a positive for the U.S. economy,” Swagel said. “Credible steps would lead to lower interest rates that would make the subsequent adjustment easier, there is a reward to virtue. It’s a positive thing, we can’t go on [with] the scolding narrative. My sense is that members of Congress understand the fiscal situation, it’s not that everyone single one has looked at our one-pager of numbers and understands the debt to the third decimal point, but they understand something needs to be done.”

“It doesn’t have to be done immediately, but at some point reasonably soon.”

Swagel is of the opinion that bond investors haven’t increased risk premiums not because they’re not worried about a fiscal crisis, but because they have priced in preventative action from Congress—in his mind “a vote of confidence that my optimism is not misplaced.”

“As a country, we face up to these problems. It’s not happening now, I’m not sure it’s going to happen in the rest of this year or even the next year, or the next two years. But we will face up to it, and the market in some sense expects us to, because otherwise interest rates would be higher,” he explained.

The Cheesecake Factory

The role of the CBO, to some extent, is to provide policymakers with their options if and when they do choose to take action on federal deficits. It’s a menu not unlike the Cheesecake Factory, Swagel says: Large, inclusive of a range of modifications and options, and delivered without judgement.

“Right now it’s maybe a pick three, and you’re looking at a six or seven course menu,” joked Caleb Quakenbush, director of fiscal policy at the Bipartisan Policy Center, in an interview with Fortune. “The longer you delay, the more you’re gonna have to add to your tab, and those options become more expensive.”

Indeed, economists and analysts aren’t necessarily worried about the absolute level of government debt, rather the debt-to-GDP ratio. Depending on whom you ask, the debt-to-GDP ratio stands at around 122% of GDP at present. This measure demonstrates an economy’s spending versus its growth, and the risk associated with lending to a nation that isn’t growing fast enough to handle its spending. To rebalance that ratio, an economy could either cut spending or increase growth—the latter being by far the less painful option.

The growth option is becoming less feasible, Michael Peterson, CEO of fiscal think tank the Peter G. Peterson Foundation, told Fortune in an exclusive interview: “I think it requires government action because we’ve waited so long. We’ve added so many trillions, and the current deficit is so big at 6% that the level of growth you would need really exceeds what is feasible. 

“Growth needs to be a part of it, but it’s sort of a vicious cycle. The longer we delay, the more debt we have, the slower growth is going to be. The more we get this under control, I think the greater optimism there is, interest rates go down, more growth comes from that. It’s sort of a virtuous or vicious cycle depending on your policy response.”

TALLAHASSEE, Fla. (WCTV) – Seventy-two veterans took a trip Saturday to our nation’s capital to visit memorials honoring their service in the armed forces.

This year marks the 12th trip to Washington, D.C. for Honor Flight Tallahassee.

Early Saturday morning, veterans and their guardians met to take a charter flight up to D.C.

Throughout the day, veterans were taken to the World War II memorial, as well as the Korean and Vietnam War memorials. The veterans also visited Arlington National Cemetery and the Tomb of the Unknown Soldier.

More Tallahassee news:

The day ended with a wonderful welcome home celebration.

Our Jacob Murphey, Julia Miller, Taylor Viles, and Grace Temple accompanied the veterans, capturing moments from throughout the day.

The team will have live coverage from Washington, D.C. on Monday to share more from the day’s events.

We will continue to have coverage throughout the month of May, leading up to our Honor Flight special on Memorial Day.

To keep up with the latest news as it develops, follow WCTV on Facebook, Instagram, YouTube, Nextdoor and X (Twitter).

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The most severe energy shock since the 1970s, the risk of a global recession and households everywhere stomaching a renewed surge in the cost of living – hitting the most vulnerable hardest.

In a sweltering hot Washington DC this week, the message at the International Monetary Fund meetings was chilling: things had been looking up for living standards around the world. But then came the Iran war.

“Some countries are in panic,” said the fund’s managing director, Kristalina Georgieva, addressing the finance ministers and central bank bosses in town for the IMF and World Bank spring meetings. “The sooner it [the Iran war] ends, the better for everybody.”

Such gatherings are not typically used to fight geopolitical battles. “You don’t get people shouting at one another at these things,” one senior figure remarked. But, as a record-breaking April heatwave swept the US capital, no one could ignore the mounting damage from the Iran war.

Those familiar with the mood over breakfast at a meeting of the G20’s representatives on Thursday, which included Donald Trump’s treasury secretary, Scott Bessent, and the outgoing US Federal Reserve chair, Jerome Powell – said the atmosphere in the room was sombre amid an open exchange of serious views.

“It is such a twilight-zone meeting,” said Mohamed El-Erian, a former IMF deputy managing director who is now chief economic adviser at the Allianz insurance group. “There are several shadows hanging over it: one is the shadow that comes from concern about the global economy as a whole.

“The second is that some countries are going to be particularly hard hit, and it’s mostly countries that very few people are talking about. But the third concern is the adding of insult to injury: the fact that the US, which started a war of choice, is going to be hit, but by a lot less than elsewhere in relative terms.”

Before Thursday’s breakfast, Rachel Reeves had started her day with an early-morning jog. Joined by her counterparts from Spain, Australia and New Zealand for a run down the iconic National Mall, she posted an Instagram selfie with a not-so-subtle dig: “Friends that run together – work together.”

A day earlier, the chancellor had told a CNBC conference that she thought “friends are allowed to disagree on things” as she criticised Trump’s Iran war as a “mistake” and a “folly” that had not made the world safer.

Speaking at a venue just steps away from the White House, before a one-on-one meeting with Bessent, she said this “fair message” was needed because UK families and businesses were feeling the pain from higher energy prices triggered by the conflict.

Those close to Reeves insist her meeting remained cordial. Britain and the US have significant shared interests in AI, financial services and trade. The chancellor also said the UK government had little time for the Iranian regime.

But with the IMF having warned on Tuesday that the Iran war could risk a global recession – in which Britain would be the biggest G7 casualty – it was clear Reeves had travelled to Washington ready to pick a fight.

“I’m struck by how vocal she has been and the words she used,” said one global financier. “We know the disagreement between Bessent and [European Central Bank president] Christine Lagarde earlier in the year. But that was in private.”

At a cocktail party held at the British ambassador’s residence for hundreds of diplomats and financiers – including the Bank of England’s governor, Andrew Bailey, the chief executive of Barclays, CS Venkatakrishnan, and dozens of senior figures – this transatlantic tension, weeks before King Charles’s US state visit, was a major topic of conversation.

The other, in the balmy residence gardens, was one of its former occupants, Peter Mandelson, as revelations about the former ambassador’s appointment threatened to further rock the UK government.

Before the war, the agenda for the IMF had been about global cooperation; the adoption of AI, jobs and work to eradicate poverty. Each of those tasks had now been complicated, but not least the task of countries working together.

For many at the meetings, the focus was on forging closer global cooperation without the world’s pre-eminent superpower.

“Everybody is talking about how you hedge against American decisions,” said David Miliband, the former UK foreign secretary, who now runs the International Rescue Committee. “You can’t do without them, because they’re 25% of the global economy. But, in a lot of fora, they’ve pulled out.

“So everyone has to think, how does one structure international cooperation? The old west is not coming back. And so everyone has to figure out how to position themselves for that world.”

For those gathering in Washington, there was irony in the fact that they were meeting in the halls of institutions founded, under US leadership, to promote global cooperation after the second world war. The whole idea of the Bretton Woods institutions was to avoid the dire economic conditions and warfare of the 1930s and 1940s. Yet this year’s meeting was taking place amid these intertwining problems.

In their conversations about the best economic policy response to the shock of conflict, the economists also knew the real power to make a difference lay two blocks across town from the IMF and the World Bank – behind the security cordons and construction equipment blocking the White House from public view. “It is not clear they can do anything about it,” said El-Erian.

Still, with a booming economy driven by AI – including Anthropic’s powerful Mythos model, the topic of much conversation – most countries cannot afford to completely break off US ties.

“People want to find ways to insulate themselves from the mess. But, on the other hand, they admire the US private sector,” El-Erian said. “The best way I’ve heard it put, is: they want to go long the private sector and short the mess. But it’s almost impossible to do.”