The planet is sitting on a $91 trillion time bomb.

Global debt stands at an unprecedented $91 trillion, roughly the size of the world economy, which will ultimately place a huge burden on its population.

Global debt has grown significantly — partly due to the coronavirus pandemic — as it is now. A growing threat to living standards even in rich economies, including the United States.But in an election year around the world, politicians are largely ignoring the problem, unwilling to be honest with voters about the tax increases and spending cuts needed to address the debt. In some cases, they are making extravagant promises that will lead to inflation again, and perhaps even a new financial crisis.

The International Monetary Fund last week reiterated its warning that the United States’ “chronic fiscal deficit” must be addressed “urgently.”Investors have long expressed concern about the long-term trajectory of the US government’s finances. “The ongoing deficit and the increasing debt burden (now) make this a medium-term concern,” Roger Hallam, global head of fixed income at Vanguard, one of the world’s largest asset managers, told CNN.

With debt burdens rising around the world, investors are becoming increasingly concerned. In France, far-right political unrest has heightened concerns about the country’s debt.sending bond yields, or the returns investors demand, soaring. The first round of France’s snap elections on June 30 showed that some of the market’s worst fears may not come true. But even without the specter of an immediate financial crisis, investors are demanding higher returns to buy the debt of many governments as the gap between spending and taxes balloons.

“One-way” tax increases and cuts in social benefits

Higher debt service costs mean less money for vital public services or to deal with crises such as economic collapse, epidemics or wars.

Since government bond yields are used to price other debt, such as mortgages, higher yields also mean higher borrowing costs for households and businesses, hurting economic growth. As interest rates rise, private investment declines, reducing governments’ ability to borrow to cope with economic downturns.

Addressing the U.S. debt problem will require either raising taxes or cutting benefits like Social Security and Medicare.“A lot of people (including politicians) are not willing to talk about the hard choices that have to be made,” said Karen Dynan, a former chief economist at the U.S. Treasury Department who is now a professor at Harvard’s Kennedy School. “These are very serious decisions that can have major consequences for people’s lives.”

Kenneth Rogoff, an economics professor at Harvard University, agrees that the United States and other countries will have to make painful adjustments. Debt is “no longer free,” he told CNN.

“In the 2000s, many academics, policymakers and central bankers came to the view that interest rates would stay near zero forever, and then they started to think that debt was a free lunch. That was always wrong because you can think of government debt as a mortgage with a flexible interest rate, and if interest rates go up sharply, your interest payments go up a lot,” Rogoff added. “And that’s exactly what happened around the world.”

“Conspiracy of Silence”

In the United States, the federal government plans to spend $892 billion in the current fiscal year on interest payments—more than it budgeted for defense and closer to the budget for Medicare, health insurance for the elderly and disabled.

Next year, interest payments will top $1 trillion. The national debt alone is more than $30 trillion, an amount roughly the size of the U.S. economy, according to the Congressional Budget Office, the congressional budget watchdog. The CBO projects that the U.S. debt will reach 122% of GDP in just 10 years. By 2054, the debt is expected to reach 166% of GDP, slowing economic growth.

So how much debt is too much? Economists don’t think there is a “predetermined level at which bad things happen in the markets,” but most estimate that if debt reaches 150% or 180% of GDP, it means “a very serious cost to the economy and society more broadly,” said Karen Dinan.

Despite growing concerns about the U.S. government’s debt, neither Joe Biden nor Donald Trump, the leading candidates for the 2024 U.S. presidential election, have promised fiscal discipline ahead of the election. During the first televised presidential debate last week, hosted by CNN, each candidate accused the other of worsening the U.S. debt situation, whether through Trump’s tax cuts or Biden’s extra spending.

British politicians have also put their heads in the sand ahead of a general election on July 4. The Institute for Fiscal Studies (IFS), an influential think tank, has condemned a “conspiracy of silence” between the Conservatives and Labour over the financial crisis. Britain’s poor financial condition.

“Whoever comes to power after the election will soon face a difficult choice, unless they are lucky,” IFS director Paul Johnson said last week. “Raise taxes by more than they told us in their manifesto, make cuts in certain areas of spending, or borrow more and just run up debt for a longer period of time.”

Countries trying to deal with the debt issue are facing difficulties. In Germany, the ongoing internal conflict over debt limits has put the country’s three-party ruling coalition under enormous pressure.The political standoff could come to a head this month. In Kenya, the backlash over efforts to tackle the country’s $80 billion debt burden has been far worse. Proposed tax hikes sparked nationwide protests that killed 39 people, prompting President William Ruto to announce last week that he would not sign the proposals into law.

With information from CNN