OmfgWtfZergd: Not all of it. And it’s a deficit, not a debt.

The reason why it’s a problem, is that when a government spends money it doesn’t have, it causes an oversupply of currency, which causes inflation. A bit of inflation is fine, but when it gets too high too fast, it can spiral out of control and cause your economy (and any economy connected to yours) to completely crash.

Thus, we want to control government spending – especially spending which is not in some way beneficial to the economy and thus balancing – because we don’t want to throw ourselves back to the stone-age.

China won’t call in its debt because not only is its currency pegged to yours, but USD tends to fill most reserves and in general is important to the world economy. What’s good for them is good for the US and vice-versa. Not only that, but you two being so interdependent means that China will stay on the Security Council, and Taiwan will be out of the UN and world diplomacy forever.