How will unsustainable US debt end?

US debt in the hand of the public now stands at 99 % of GDP. The Congressional Budget Office [CBO] projects that it will reach 107% of GDP by 2027, thereby surpassing the longstanding record from the end of World War II. The projections of the ratio of debt to GDP show an ever-upward path, the definition of unsustainability.

How will unsustainable US debt end?

November 30, 2025 — US debt in the hand of the public now stands at 99 % of GDP. The Congressional Budget Office [CBO] projects that it will reach 107% of GDP by 2027, thereby surpassing the longstanding record from the end of World War II. The projections of the ratio of debt to GDP show an ever-upward path, the definition of unsustainability.

Discussions of the US national debt are often launched via an old quote from Herb Stein (CEA Chair under Nixon): “If something cannot go on forever, it will stop.” But what form will the stop take? There are six ways that an unsustainable debt path can come to an end: faster economic growth, lower interest rates, default, inflation, financial repression, and fiscal austerity. In the US case, one is tempted to scratch all six off the list, one by one. But that would leave us in violation of Stein’s Law.read more

This entry was posted in budget, Trump Administration and tagged explosive, federal debt, spend, tax on November 30, 2025.