Whether or not the level of debt is a problem depends on our ability to finance and repay the debt . . .
That ability is made less by past debt, because today's revenue is less as a result of the past debt. Today's resources to finance and repay are less as a result of debt from 10 or 20 years ago. And our ability to finance and repay in the future will be made less by the debt we add today. Our deficits are not ones which enrich the country later, but which only increase our spending today on today's consumption, or instant gratification.
. . . our ability to finance and repay the debt which depends on the level of debt, the . . .
The level of debt is made higher by earlier higher debt, overall getting higher and higher percentagewise. So, as we borrow more, we make the future debt problem worse and worse. So our debt problem today is higher because of past increased debt, and our future debt problem will be made worse by our higher and higher debt today.
. . . depends on the level of debt, the ownership of the debt and . . .
It doesn't really matter who owns the debt. No matter who owns it, it has to be paid back, and the burden is no less because a foreigner owns it. The same principle and interest has to be paid back and imposes the same burden on future taxpayers, or the same pressure to borrow more later in order to pay back the previous debt to whoever owns it.
. . . ownership of the debt and the US's net worth or income.
The net worth or income is made less by past debt. The present net worth and income is less today as a result of past debt 10 or 20 years ago, because it is a liability today which we otherwise would not have, just as the net worth and income in the future will be made less by today's debt which imposes a liability onto the future.
That is why responsible analysis looks at the debt to net worth ratio for most borrowers.
That net worth is less because of past debt. Our net worth today is lower as a result of past debt 10-20 years ago, and the nation's net worth in the future will be less because of our increased debt today.
So, for most gov'ts, the debt/GDP is usually taken as one measure of whether debt is too high.
And that ratio is the highest ever because of the past higher debt, and our increasing debt today will drive that ratio even higher for the future. So if "too high" means anything, it is much too high today and will become even worse in the future if we don't stop the out-of-control deficits.
The ability to handle the interest payments on the debt is usually measured by the gov't primary deficit/surplus . . . .
This also is the worst ever, and in the future it will become even worse if something does not change to reduce rather than continue to increase the debt.
If it is a primary surplus, that is usually taken to indicate the gov't is in decent shape to handle its deficit.
Overall it is becoming less and less "in decent shape to handle" it. Arguably it was in good shape back in the late 1990s during the boom, which was unusual and probably won't happen again. Maybe there will be a similar boom in 40 or 50 years when fusion power comes into play to save us from climate change and give us cheap and clean energy. But in the meantime it is fantasy to expect there is any boom on the way such as we had in the late 1990s. And without such a boom, the gov't will not ever be "in decent shape" to handle the deficit unless something drastically different is done, like keeping the debt ceiling where it is rather than raising it.
Moreover, the extent that the gov't debt is owned domestically is the extent to which repayment is not a national macroeconomic problem since it involves a redistribution from taxpayers to domestic bond holders.
No, it doesn't matter who the bond holders are. They must be repaid, whoever they are, and this obligation to pay them is the problem, not whether they are foreign or domestic.
Currently, US citizens and institutions own just a little over 70% of the Federal debt which means that repayment would involve the US sending 30% of the debt over time (around $6 trillion) outside the country. Which would represent a drain on our economy.
No, it's no more a drain on the economy than if it's paid to US citizens and institutions. The obligation to pay, and benefits of paying rather than defaulting, is the same, no matter who the creditors are.
The internal repayment would have some distributional effects on the macroeconomy but most analysts think that effect would be relatively minor.
They are wrong if they think it makes any difference overall. Of course there are winners and losers with any kind of distribution. But overall there is no gain just because the repayment is internal rather than external.
Finally, the notion that a default would involve only a couple of years of pain ignores the effects on anyone who receives federal income support or who works for the federal gov't for those years.
The damage to those receiving federal payments is worse, in the long run, if the runaway debt continues. I.e., it's worse than if there is a default which brings an end to the out-of-control debt we rely on now. That default would do less damage overall than a continuation of the present debt without limit.
A default might cause significant hardship on those recipients and workers.
The hardship on them will be greater if there is no default so that future recipients and workers suffer the consequences of the continuing higher debt.
Today's recipients and workers are being made worse off by past increasing debt which has now become a higher cost for today's gov't and reduction in its ability to pay today's recipients and workers.