The United States is facing a looming fiscal crisis, with its national debt projected by the International Monetary Fund (IMF) to reach levels that will soon dwarf those of Italy and Greece, nations historically associated with high public debt. Forecasts indicate that by 2035, U.S. general government gross debt will hit 143.4% of GDP, a substantial increase from 123% in 2024, and significantly higher than Italy’s 137% and Greece’s 130%.
This stark projection is driven by persistent U.S. budget deficits, which are expected to exceed 7% of GDP annually for at least the next decade. This prolonged period of deep deficits is unusual among major economies and is attributed to a confluence of factors: costly tax cuts, mounting obligations from social security and healthcare programs, increased defense spending, and higher borrowing costs stemming from the Federal Reserve’s interest rate policies. The growing cost of servicing this debt is a major concern, with interest payments now surpassing combined expenditures on transportation and education. Every 1% increase in average interest rates is estimated to add $380 billion to the annual bill.
While Italy and Greece are pursuing fiscal reforms and showing signs of stabilization, the U.S. is charting a course towards greater fiscal imbalance, even as its economic growth slows. This widening debt gap raises serious questions about America’s future fiscal resilience. High debt levels can impair the government’s ability to respond effectively to economic shocks, natural disasters, or geopolitical instability. Moreover, escalating interest costs divert taxpayer money away from essential investments in infrastructure, education, and national security.
A significant portion of U.S. debt, exceeding 80%, will mature within the next ten years. This necessitates constant refinancing, which could become more expensive as markets demand higher returns for Treasury bonds. The Congressional Budget Office predicts annual interest payments could reach nearly $1.8 trillion by 2035. Although the U.S. benefits from the dollar’s status as the world’s primary reserve currency and the depth of its financial markets, the IMF stresses that these advantages are not permanent and are contingent on responsible fiscal policies.
The national debt has seen a staggering increase of $2.18 trillion in the past year, pushing the U.S. into “uncharted territory.” Fiscal experts agree that immediate and substantial reforms are crucial, including measures to control spending, optimize tax revenue, and foster long-term economic growth. The projected crossover point where U.S. debt surpasses that of Italy and Greece represents a critical warning, highlighting the urgency for Washington to alter its fiscal trajectory to avoid a more severe economic downturn.