The United States is navigating a fiscal landscape reminiscent of nations previously synonymous with overwhelming debt, as its national debt continues its relentless ascent. Projections from the International Monetary Fund (IMF) indicate that by 2035, US general government gross debt could reach 143.4% of GDP, surpassing the anticipated debt-to-GDP ratios of Italy (137%) and Greece (130.2%). This shift marks a critical turning point for the world’s largest economy, signaling a potential reordering of global financial influence.
Several economic forces are driving this debt surge. The US faces persistent budget deficits projected to stay above 7% of GDP annually for at least the next decade. This is compounded by generous tax policies, growing commitments to social security and healthcare programs, substantial defense spending, and the increased cost of borrowing stemming from the Federal Reserve’s monetary tightening. The financial burden is immense, with interest payments alone now consuming more than the combined federal outlays for transportation and education.
Adding to the pressure, market dynamics are becoming less forgiving. More than 80% of outstanding US government debt is due within the next ten years. This necessitates continuous borrowing, and as interest rates rise, the cost of this rollover escalates dramatically. Each 1% increase in average interest rates is estimated to add $380 billion to the annual debt servicing costs. By 2035, the Congressional Budget Office estimates these interest payments could approach $1.8 trillion per year.
This escalating debt poses significant risks. It diminishes the government’s capacity to act decisively during future crises, whether economic, environmental, or geopolitical. Moreover, it forces trade-offs, diverting resources away from investments in infrastructure, education, and national security. While the US retains advantages like the dollar’s reserve currency status, the IMF cautions that these are not immutable and depend on responsible fiscal stewardship. The nation’s debt has ballooned by $2.18 trillion in the past year, entering ‘uncharted territory’ and necessitating urgent policy interventions focused on spending discipline, tax efficiency, and sustainable growth.