I won't provide an overall assessment of the risk of the U.S. debt level here. What I want to discuss is one way that the U.S. debt level is riskier than most people think, and one way it is less risky than most people think.

The way it is more risky than people think is that in the case of another financial panic or other extreme event it will reduce our willingness to engage in deficit spending and pass something like TARP. Many will respond to this by saying that the U.S. remains the cleanest dirty shirt, and that a financial panic is likely to be global in which case investors will flock to our debt as a relatively safe haven. But this is about our ability to borrow, not our willingness. Say what you will about the economics of debt, people really don't like it. Regardless of Paul Krugman's arguments, the conventional wisdom in family rooms and among politicians is that the debt level needs to be addressed and is a bad thing. Politicians may be willing to borrow and pass something like TARP even despite popular opposition if enough economists scream that they must or the global economy will collapse. But the debt ceiling debate should show us that this is no longer guaranteed to work. Probabilistically, a higher level of debt means we are at risk of having our hands tied when we may need to spend badly.

The way it is less risky than people think is that it is always in our power to get tens of millions of people from all over the world to help us pay down the debt for us, and to do so gladly. We can do this by opening the borders and letting in more high-skilled workers. Whatever our debt level is, it is far easier to pay when spread among more taxpayers rather than less. This is even more true if a large proportion of those taxpayers are high-skilled college graduates. We can't get an extra 100 million instantly, but I think we could feasibly grow our population fairly quickly if we really wanted to. There are, after all, 150 million adults from all over the world who want to migrate to the U.S., and many of them are high-skilled. In addition, we can charge these immigrants an entry fee to help pay down the debt.  This is a golden parachute that could allow us to pay down our debt more quickly than would otherwise be the case.

Of course as with borrowing, whether we can let in tens of millions of immigrants is also limited by the public's willingness. However it remains an unused tool in our kit to reduce the debt, and the possibility of utilizing it lowers the risk of debt.