The US national debt has reached $36.2 trillion, sparking growing concern among economists and credit agencies like Moody’s, which recently downgraded the country’s credit rating. The downgrade reflects fears that economic growth won’t keep pace with rising debt and interest payments.
Economists warn that politicians’ plans to reduce the national debt are insufficient and may not be enough to address the issue. Analysts say the nation’s fiscal future is becoming increasingly uncertain, with the economy struggling to sustain spending.
The Moody’s downgrade highlights concerns about the country’s ability to manage its debt burden. The US credit rating was downgraded from Aaa to Aa1, citing declining fiscal metrics that no longer fully counterbalance the country’s economic strengths.
Despite Treasury Secretary Scott Bessent’s assurances that the market should not be too concerned, experts warn that the downgrade is a warning sign for the nation’s fiscal health. Deutsche Bank’s Jim Reid notes that the situation is precarious, with the loss of the final triple-A rating leaving investors feeling uncertain about the country’s ability to repay its debts.
President Trump has proposed paying off the national debt using funds from his “gold card” visa scheme, but experts say this approach may not be sufficient to address the issue. The Trump administration is pushing for a “big, beautiful bill” of tax cuts, which would reduce revenues needed to rebalance government spending and potentially raise GDP.
However, experts disagree with the administration’s assessment, citing concerns that extending tax cuts could lead to higher public debt. The Congressional Budget Office estimates that if provisions of the 2017 tax act are extended, public debt could reach 220% of GDP by 2025, exceeding long-term baseline projections.
In the event of investors losing confidence in the US ability to repay its debts, the Federal Reserve has a “card” it can play. Quantitative easing could lower longer-term interest rates and make it easier for the government to continue borrowing, but experts caution that this approach would likely raise eyebrows.
Source: https://fortune.com/2025/05/20/us-economy-experiencing-death-by-thousand-cuts-deutsche-bank