Governments worldwide owe an unprecedented $91 trillion, an amount almost equal to the size of the global economy and one that will ultimately exact a heavy toll on their populations

Governments owe an unprecedented $91 trillion, nearly matching the size of the global economy, which will ultimately take a heavy toll on their populations.

Debt burdens have grown so large — partly due to pandemic costs — that they now pose a growing threat to living standards even in wealthy economies like the United States.

Yet, 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 tackle the deluge of borrowing. In some cases, they're even making extravagant promises that could at least drive inflation up again and possibly trigger a new financial crisis.

The International Monetary Fund reiterated last week that “chronic fiscal deficits” in the US must be “urgently addressed.” Investors have long been concerned about the long-term trajectory of US government finances.

“But continuing deficits and a rising debt burden have now made that more of a medium-term concern,” Roger Hallam, global head of rates at Vanguard, one of the world’s largest asset managers, told CNN.

As debt burdens rise globally, investors are growing anxious. In France, political turmoil has exacerbated concerns about the country’s debt, sending bond yields, or returns demanded by investors, soaring.

The first round of snap elections Sunday suggested that some of the market’s worst fears might not come to pass. But even without the specter of an immediate financial crisis, investors are demanding higher yields to buy the debt of many governments as the gap between spending and taxes grows.

Higher debt servicing costs mean less money available for crucial public services or for responding to crises like financial meltdowns, pandemics, or wars.

Since government bond yields are used to price other debt, such as mortgages, rising yields also mean higher borrowing costs for households and businesses, which hurt economic growth.

As interest rates rise, private investment falls, and governments are less able to borrow to respond to economic downturns.

Tackling America’s debt problem will require either tax hikes or cuts to benefits like social security and health insurance programs, said Karen Dynan, former chief economist at the US Treasury and now professor at the Harvard Kennedy School. “Many politicians are not willing to talk about the hard choices that are going to need to be made. These are very serious decisions… and they could be very consequential for people’s lives.”

Kenneth Rogoff, an economics professor at Harvard University, agrees that the US and other countries will have to make painful adjustments.

Debt is “not free anymore,” he told CNN.

“In the 2010s, a lot of academics, policymakers, and central bankers thought interest rates would stay near zero forever and then started thinking debt was a free lunch,” he said.

“That was always misguided because you can think of government debt as holding a flexible-rate mortgage, and if interest rates go up sharply, your interest payments increase a lot. And that’s exactly what’s happening all over the world.”