Soaring federal debt could destroy America’s freedom of economic action. That’s the warning from the Congressional Budget Office chief, Phillip Swagel. He reckons our “unprecedented” debt risks a “Liz Truss-style market shock,” as the Financial Times puts it. That’s the meltdown that hit Great Britain when the ex-premier pitched a pro-growth tax cut plan. Markets and the International Monetary Fund in effect told Britons they couldn’t afford it.

Mr. Swagel’s warning is a reminder of the perils of profligacy. One can imagine the outrage if, at some point, plans to reduce federal income taxes, or embark on a military buildup, were nixed by such holders of American debt as, say, Red China, Japan, Saudi Arabia, or the European Union. Yet that is precisely the scenario that Mr. Swagel suggests could arise if America fails to get a handle on its “ballooning federal debt.”  

“The danger,” the CBO’s Mr. Swagel tells the FT, “is what the UK faced with former prime minister Truss, where policymakers tried to take an action, and then there’s a market reaction to that action.” Faced with a moribund economy, Ms. Truss had proposed slashing tax rates to spark growth. Not so fast, the IMF swooped in to say. We thought the agency was out of line. Ms. Truss’s instinct for the supply side was just what Britain needed. 

With that government intervention, though, financial markets gave the Truss plan a vote of no-confidence. “The pound fell to its lowest-ever level against the dollar,” the Guardian said. British government debt prices “collapsed,” raising borrowing costs. The Bank of England had to buy up government bonds “to save funds responsible for managing money on behalf of UK pensioners from collapse,” the Guardian added. The plan was jettisoned.

A “humiliating U-turn” for Ms. Truss, is how Reuters described it. The debacle was just as degrading, if not more so, for Britain, which found itself at the mercy of financial markets — and the IMF. The embarrassment was especially acute seeing as, in Brexit, Britons had voted to free themselves from the dictates of an unelected multinational body, the European Union. Yet Britain’s debt, running at 100 percent of GDP, gives its creditors a kind of veto.

All the more reason to heed the warning from Mr. Swagel, who served under President George W. Bush in the Treasury. Americans have sat by as federal debt held by the public has risen to $26.2 trillion. That is, at 96 percent of GDP, just a mite less than Britain’s. If present trends persist and America follows the all-too-bipartisan path of federal overspending, the CBO warns, the debt will rise to 166 percent of GDP by 2054. 

If there’s any comfort to be found amid America’s ocean of red ink, it’s that the nation has faced enormous federal debts before — and repaid them. The CBO notes that World War II drove federal debt to a record high as a proportion of GDP. That debt, though, Mr. Swagel explains, “was largely paid back within the generation of the people who fought the war.” Today’s debts, he frets, “are not ones the current generation is going to bear the burden of.”

Speaking of a “Truss-style debt ‘danger,’” as the FT puts it, Mr. Swagel reckons America is “not there yet.” Yet the opportunity to set the nation on a more fiscally responsible course looks to be dimming — with little appetite for spending restraint by the Bidenites in Congress. As soon as 2026, Mr. Swagel notes, “bond markets” could “snap back,” the FT reports, “as higher interest rates” push the price of carrying America’s debt up to $1 trillion. 

Nor should Americans be complacent that the “dollar’s role as the world’s reserve currency” will “insulate” the country from “market pressures,” Mr. Swagel warns. After all, the pound sterling once played that central role in the global economy. Yet as Britain failed to maintain its economic predominance, it found it was easier to borrow than to curb its government spending. So Britain handed its sovereignty to its creditors. For Americans, that’s a cautionary tale.