US Debt - Why Do We Care
Segment # 398
The CBO (Congressional Budget Office) is a nonpartisan federal agency that provides economic data and budget analysis to the U.S. Congress. It was established in 1974 to support Congress in making informed budgetary and economic decisions. This is hardly a right leaning organization. If anything, it probably leans the other way. However, that said what they predict for the US is worth noting in that it clearly puts in context why and what Trump is doing.
Look at these predictions and then look at what Trump is doing with the understanding that continuing on our present path is not sustainable. Whether that be the border, crime, trade, international policy, the budget, healthcare, freedom, or any other myriad of issues the CBO becomes the rationale.
Many economists believe its worse that what the CBO predicts of we don’t change course.
Trump has been predicting what has now happened since his appearance on the Oprah show in 1988. When you consider all problems created by ;politicians, I would rather have a businessman in the Oval office.
There is a great deal of information here. But hit the high spots and put it in the context of what Trump is doing now. No Dems are offering any other options except doing the same and clearly that’s not an option. The “Hands Off” protests this weekend that seemingly are asking for “Hands Off” our future.
The burgeoning U.S. debt could contribute to concerns about the long-term dominance of the U.S. dollar, but it’s unlikely to lead to a global abandonment of the dollar anytime soon. Here's a breakdown of the key dynamics:
🔑 Why the U.S. Dollar Still Dominates
Global Reserve Currency Status:
Over 50% of global foreign exchange reserves are still held in USD. This reflects deep trust in the U.S. financial system, rule of law, and the size/liquidity of U.S. markets.Dollar-Denominated Trade:
Many global commodities (like oil) are priced in dollars, which keeps demand high. Projections suggest a narrowing trade deficit over the long term, influenced by a weakening dollar and improved economic growth among major U.S. trading partners, which together are expected to bolster export growthNo Clear Alternative:
The Euro is hindered by EU fragmentation and slower economic growth.
China’s renminbi (RMB) is not fully convertible and is tightly controlled.
Gold and crypto aren’t practical for large-scale global trade—at least not yet.
🤔 How Rising U.S. Debt Could Weaken Confidence
Debt Sustainability:
If debt grows faster than GDP for too long, it may eventually raise fears of inflation, devaluation, or default (even if highly unlikely).Interest Payments:
Rising interest rates mean more tax revenue goes to debt service, crowding out spending or requiring higher taxes—this can be politically and economically destabilizing.Fiscal Mismanagement Perception:
Global investors might worry that political gridlock or unsustainable fiscal policies will make the dollar riskier over time.
🧭 What Could Cause a Shift Away from the Dollar?
A major U.S. fiscal crisis or default (even technical, like a debt ceiling standoff).
A viable alternative becoming more appealing and accessible.
A geopolitical realignment (e.g., growing BRICS alliances pushing for de-dollarization). Note: BRICS is 40% of the worlds population, about 30% of global GDP and includes Brazil, Russia, India, China, and South Africa
Increased use of CBDCs (central bank digital currencies) that bypass SWIFT and USD rails.
🛡️ But in Reality…
Moving away from the dollar would take decades, not years.
Countries and corporations would need to rewire the global financial system—a huge task.
Even those trying to de-dollarize (like Russia, China) still hold significant dollar reserves and use it in trade.
Yes, rising U.S. debt adds some pressure on the dollar's status—but abandonment? Highly unlikely in the near term. Watch for slow shifts, not sudden exits.
Want to dig into recent de-dollarization moves or what a world without a dominant dollar might look like?
What if:…..
The burgeoning U.S. debt could contribute to concerns about the long-term dominance of the U.S. dollar, but it’s unlikely to lead to a global abandonment of the dollar anytime soon. Here's a breakdown of the key dynamics:
Yes, rising U.S. debt adds some pressure on the dollar's status—but abandonment? Highly unlikely in the near term. Watch for slow shifts, not sudden exits.
Want to dig into recent de-dollarization moves or what a world without a dominant dollar might look like?
What If we do nothing
1. Trade Deficits
The U.S. has experienced persistent trade deficits, where imports exceed exports. In February 2025, the trade deficit narrowed to $122.7 billion from a record high of $130.7 billion in January. Trading Economics+1Bureau of Economic Analysis+1
Projections:
Short-Term (2025-2026): Real exports are projected to grow by 0.7% in 2025 and 1.0% in 2026, while real imports are expected to increase by 1.8% in 2025 and 0.9% in 2026. Deloitte United States
Long-Term: The trade deficit is anticipated to remain substantial, influenced by factors such as global trade policies and domestic consumption patterns.
2. National Debt
The U.S. national debt has been on an upward trajectory, raising concerns about fiscal sustainability. As of early 2025, the federal debt held by the public is projected to be 100% of GDP.
Projections:
By 2035: Federal debt is expected to rise to 118% of GDP, surpassing historical highs.
Interest Payments: Net interest payments on the debt are projected to total $952 billion in 2025, approaching 3.2% of GDP, and are expected to surpass $1 trillion annually in subsequent years.
3. Budget Deficits
Persistent budget deficits contribute to the growing national debt. For fiscal year 2025, the Congressional Budget Office (CBO) projects a deficit of approximately $1.9 trillion, equating to 6.2% of GDP.
Projections:
Next Decade (2026-2035): Annual deficits are expected to rise, reaching $2.5 trillion by 2035, maintaining levels around 6% of GDP. Peterson Foundation+1Bipartisan Policy Center+1
Long-Term Outlook: Over the next 30 years, the total federal budget deficit is projected to average 6.3% of GDP, significantly higher than the 50-year average of 3.9%. Congressional Budget Office
4. Fiscal Policy Challenges
The U.S. faces several fiscal policy challenges that could impact these projections:Fitch Ratings
Tax Policies: Extending the 2017 individual tax cuts without offsetting measures could add over $4 trillion to the deficit over the next decade. Reuters
Spending Initiatives: Proposals for increased spending on border security and infrastructure may further influence budgetary outcomes. New York Post
Economic Growth: Slower economic growth rates, influenced by factors such as trade policies and global economic conditions, may affect revenue generation and deficit levels.
Conclusion
The U.S. is projected to continue facing significant trade deficits, increasing national debt, and substantial budget deficits in the coming years. These trends underscore the importance of implementing comprehensive fiscal strategies to ensure long-term economic stability and sustainability.