The US national debt will reach $36 trillion next year, with interest payments exceeding $1 trillion for the first time. Goldman Sachs economists warn that if lawmakers wait too long to address deficits, a historic austerity push could be needed to avoid disaster.
President Donald Trump claims his “Big, Beautiful Bill” will put the US on a sustainable fiscal path, but experts disagree. The spending bill passed by House Republicans and increased tariff revenue may lower the budget deficit when excluding interest payments, but rising borrowing costs and high debt-to-GDP ratio make it unsustainable.
The US pays more in interest on its debt than it spends on Medicare and defense. Interest payments will hit $1 trillion next year, trailing only Social Security as the government’s biggest outlay. If the debt grows large enough, interest expense could become so large that stabilizing debt-to-GDP would require running persistent fiscal surpluses.
The Congressional Budget Office estimates the GOP spending bill would increase deficits by $2.8 trillion over the next decade. However, economists say it’s unclear at what level the debt becomes unsustainable. Treasury Secretary Scott Bessent says the US has a “spending problem,” but not a “revenue problem.”
Experts warn that continuing to avoid taking action will put future lawmakers in a tighter spot, especially if borrowing costs rise. Yields on long-term US Treasury bonds have remained elevated as investors wait for a patient Federal Reserve to cut interest rates.
The situation highlights the need for policymakers to make tough choices between spending and taxes. If lawmakers wait too long, a historic austerity push could be needed to avert disaster. The history of Germany’s Weimar Republic serves as a warning: printing more money can lead to hyperinflation and economic malaise.
Source: https://fortune.com/2025/06/19/goldman-sachs-says-trumps-spending-plan-wont-stop-the-national-debt-from-hitting-unsustainable-highs-not-seen-since-world-war-ii