"The nonpartisan Peter G. Peterson Foundation gathered a series of distinguished national economists and historians from outside the foundation in a collection of essays published Thursday. They analyzed risks to U.S. economic strength, dollar dominance, and global leadership. The experts also explored the national debt's impact on interest, inflation and financial markets, with some characterizing this moment in history as a crisis."
"The debt crisis has reached a critical threshold. The U.S. now spends approximately $1 trillion annually on servicing its debt-a figure that surpasses the country's spending on defense. Economist Heather Long wrote that the 2020s are "fast becoming the era of big permanent deficits" with annual budget gaps projected to remain high (around 6% of GDP) even though unemployment is low, a startling departure from U.S. historical norms."
The U.S. national debt totals $38 trillion, exceeding 120% of annual GDP and eroding fiscal headroom. Debt servicing consumes roughly $1 trillion per year, more than defense spending, and leaves limited capacity to finance major military operations or emergency economic stimulus. Structural budget gaps are expected to remain large—around 6% of GDP—even with low unemployment, signaling a shift toward persistent deficits. Historical pathways for reducing debt, such as rapid postwar growth with low real interest rates and large defense cuts during peacetime, are not available under current conditions. The situation constitutes a significant fiscal and economic risk.
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