The United States is on track for a fiscal reckoning not seen in a century, with its national debt escalating to alarming new heights. The International Monetary Fund (IMF) has issued a stark warning: America’s debt-to-GDP ratio is projected to surpass those of Italy and Greece, countries previously emblematic of fiscal distress. By 2035, U.S. general government gross debt is expected to reach 143.4% of GDP, a significant jump from 123% in 2024 and notably higher than Italy’s projected 137% and Greece’s 130%.
This fiscal deterioration stems from persistent deficits, which the IMF forecasts will remain above 7% of GDP annually until 2035, a duration unmatched by other advanced economies. The root causes are multifaceted, including expansive tax policies, the growing burden of retirement and healthcare commitments, increased defense expenditures, and the ripple effects of Federal Reserve rate hikes on borrowing costs. Crucially, interest payments on the national debt are consuming an ever-larger portion of the budget, now eclipsing combined spending on vital sectors like transportation and education. Every one percent rise in average interest rates is estimated to cost the nation an additional $380 billion annually in borrowing expenses.
In contrast, European nations like Italy and Greece are actively implementing reforms to mend their finances. Italy’s debt is stabilizing around 137% of GDP, while Greece’s is trending downwards towards 130.2% by 2030. The IMF’s analysis highlights that the U.S. is diverging from this path, experiencing a growth in fiscal imbalances even as its economic expansion moderates.
Financial experts are sounding the alarm about the potential consequences. A debt-laden America may find its capacity to respond to future recessions, natural disasters, or military conflicts severely compromised. Elevated interest payments crowd out investment in critical areas such as infrastructure, education, and national security. Furthermore, a substantial portion of U.S. debt, over 80%, matures within the next ten years, necessitating constant refinancing and potentially higher borrowing costs as markets demand greater returns on Treasury bonds.
While the U.S. still leverages the dollar’s international standing and the strength of its financial markets, the IMF emphasizes that these advantages are not guaranteed indefinitely. Maintaining international confidence hinges on sound fiscal stewardship. The national debt has already climbed by $2.18 trillion in the past year, pushing the U.S. into “uncharted territory.” Addressing this requires immediate, impactful action: reforming spending, enhancing tax efficiency, and prioritizing long-term economic growth. The point at which U.S. debt surpasses that of Italy and Greece will be a symbolic milestone, potentially heralding a more challenging economic future if corrective measures are not taken.