A American public debt could reach US$64 trillion in just ten years. The projection appears in recent analyzes by the Congressional Budget Office, the technical and nonpartisan body in Congress responsible for measuring the fiscal impact of federal policies. And the data begins to change the tone of the economic debate in the United States: for the first time in decades, the largest economy on the planet begins to discuss not just inflation or interest rates, but fiscal sustainability.
Today, the federal debt already exceeds US$34 trillion. The problem isn’t just size — it’s the speed of growth. Based on the scenarios analyzed, the economic policies defended by Donald Trump, especially the permanent extension of the tax cuts originally approved in 2017, would increase the government’s structural deficit. In other words: this is not an emergency expense, as occurred during the pandemic, but a permanent imbalance between revenue and expenses.
The mechanism is simple. When taxes fall without an equivalent reduction in spendingthe government needs finance the difference by issuing Treasury bonds. These bonds are purchased by investors, funds and central banks around the world. This is how Washington pays its bills.
O The problem starts when debt grows faster than the economy. According to the CBO, annual deficits could remain close to 6% to 7% of GDP over the next decade. For comparison, economists consider something close to 2% to 3% to be healthy. Above this, the debt starts to grow automatically, even without new public policies.
And there is a chain effect. The greater the debt, the greater the interest expense. And interest spending in the United States is quickly becoming one of the federal government’s largest expenses — competing with Defense and Social Security. This means that the American government may enter an unprecedented cycle: taking out loans just to pay interest on previous loans.
The impact is not restricted to Washington. American debt is the main financial asset on the planet. The US Treasury bond is considered the safest investment in the world. Central banks, including Brazil’s, store reserves in dollars precisely in these securities. If debt rises, interest rates tend to rise too. AND When American interest rates rise, the entire planet feels it.
Real estate credit becomes more expensive. Business financing becomes more expensive. Emerging currencies depreciate. Capital returns to the United States. That’s why Economists treat the topic not as a domestic discussion, but as a global issue.
There is also a delicate political component. Republicans argue that tax cuts stimulate economic growth and compensate for part of the loss of revenue. Democrats argue that without increased revenue, the country will be stuck in permanent deficits. The CBO does not enter into the ideological debate – it only calculates scenarios – and its numbers show that the projected growth would not be enough to neutralize the deficit.
The most sensitive point appears in the coming decades.
As the American population ages, mandatory programs – mainly Medicare and Social Security – automatically increase. THE government will start spending more regardless of who is in power. In other words, the problem does not depend only on Trump or Biden. It depends on the math.
If nothing changes, the debt could exceed the size of the entire American economyin the coming decades. Historically, this only occurred in extreme periods, such as after World War II — but at that time the US had accelerated growth and a young population. Today, the scenario is opposite: moderate growth and an aging population.
The discussion begins to appear on Wall Street, the Federal Reserve and even the Treasury Department. It is not yet a crisis. But it is also no longer just an academic hypothesis.
The world’s greatest economic power is slowly beginning to face a debate that has always belonged to emerging countries: how long a government can spend more than it earns without changing its own financial stability.
The answer will not come in an election. It will come in a decade.
*This text does not necessarily reflect the opinion of Jovem Pan.
