For decades, American politicians and investors have mocked the nations that gave rise to Western democracy — Italy and Greece — as examples of fiscal excess. Italy, with its revolving door governments, and Greece, with its financial bailouts and austerity hangovers. But now, it’s its transatlantic descendant that’s writing the biggest checks.
According to new forecasts from the International Monetary Fund (IMF), America’s debt – which recently surpassed $38 trillion – is expected to rise faster than that of almost all advanced economies, rising from about 125% of GDP today to about 143% by 2030. That would put the U.S. above Italy, whose debt is expected to remain close to 137% of the country’s GDP, and Greece, which is expected to fall to about 130%.
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For the first time in modern history, Washington may find itself borrowing more, relative to the size of its economy, than the very nations it once used as cautionary tales.
The most recent booster is President Donald Trump’s “One Big, Beautiful Bill Act.” The sweeping legislation, passed by Congress this summer, combines deep tax cuts with an increase in federal spending, including half a trillion for a proposed “Golden Dome” missile defense shield.
Experts at the Bipartisan Policy Center estimate the bill will cost $4 trillion over the next 10 years, with tax cuts making it harder to close the gap.
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It is certain that Trump’s second term policies are at the same spending levels as previous administrations. The nonpartisan Tax Policy Center estimates that the total amount of federal relief measures taken in the wake of the COVID-19 pandemic — many of which involved former President Biden’s policies — reached $5 trillion, resulting in deficits not seen outside of wartime. While many of these budget excesses were temporary, the center notes that the U.S. will still pay for it in the coming decades in the form of higher interest rates. The infrastructure bill passed during Biden’s term totaled $1.2 trillion.
The Congressional Budget Office projects that the total national debt will exceed $38 trillion by 2029, growing by about $7 trillion per year.
‘Symbolic moment’
Meanwhile, the European economies that once defined fiscal chaos have stabilized. Italy, still burdened by low growth and an aging population, brought its deficit below the European Union’s 3% threshold a year early. Greece, which saw its debt-to-GDP ratio rise above 200% during the COVID-19 crisis, has reduced it by almost half through spending restraint and fiscal reforms. Both countries are now running small primary surpluses – meaning they earn more than they spend, before interest payments.
“It’s a symbolic moment,” Mahmood Pradhan, head of global macroeconomics at Amundi Investment Institute, told the Financial Times. “The US is entering a period of persistent deficits, while Italy and Greece, after painful lessons, are living within their means.”
However, the change may not last. Lorenzo Codogno, former chief economist at Italy’s Treasury, told the Guardian that tariff escalations and Trump’s demands for higher European defense budgets could tempt governments in Rome and Athens to loosen their belts by following the bad example.
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“Public finances remain vulnerable to a sudden negative change in the global scenario,” he said.
For now, though, the optics – and the irony – are stunning. “Many in Washington have long dismissed Europe’s slow-growing economies,” James Knightley, chief international economist at ING, told the Guardian. “But when the numbers look like this, the conversation changes.”
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