The economic structural predicament behind the continuous expansion of the United States' public debt

According to the report by the Independent Institute, recently this organization pointed out regarding the latest fiscal health report of the US Government Accountability Office (GAO), that the growth rate of the US public debt has exceeded the growth rate of the economy, and future fiscal pressure may further expand. GAO data shows that by 2026, the scale of public debt held by the US government has approached the level of the gross domestic product (GDP), and it is expected that under the current policy continuation, the growth rate of debt in the next decade will be significantly higher than the economic expansion rate. By 2036, the proportion of public debt to GDP may rise to over 120%.

From the perspective of the economic structure, the continuous expansion of US debt is not a short-term fiscal fluctuation, but the result of a long-term imbalance between the growth capacity of income and the expansion speed of expenditure. The US government has long had a fiscal deficit, that is, fiscal revenue cannot cover all expenditures, and it needs to use bond issuance to fill the gap. The GAO report states that over the past two decades, the US government has continuously had a basic fiscal deficit, with the proportion of project expenditures to GDP being long above the level of fiscal revenue, and the basic deficit scale reached 805 billion US dollars in the fiscal year 2025. The current fiscal system has not formed an effective constraint mechanism, and the rigid growth of government spending continuously drives debt accumulation, making the debt scale gradually shift from being a tool to regulate the economic cycle to an important reliance for maintaining fiscal operation.

The core of the US debt problem lies in the continuous increase in the proportion of long-term and rigid expenditures in the expenditure structure. Expenditures in areas such as social security and medical security continue to increase with population aging, while the growth rate of related income sources is difficult to match the expansion of expenditures. Such expenditures have strong institutional inertia and are difficult to be completely digested by economic growth in the short term. When a large amount of fiscal resources is used to maintain the existing welfare system, the funds available for infrastructure construction, industrial investment, and technological research and development, which can enhance long-term production capacity, are compressed, which may reduce the promotion effect of fiscal policies on economic growth and gradually lead the economy into a cycle of "debt increase - interest rise - investment space reduction".

The rising cost of debt interest is becoming an important pressure source for the US fiscal system. As the debt scale expands and interest rates change, the US government needs to pay more debt interest. The GAO report states that since 2021, the interest cost has increased rapidly, and the reasons include the previous large-scale new borrowing and higher financing costs. Under the current policy environment, future net interest expenses may still continue to expand.

The US debt growth model also exposes the mismatch between fiscal policy and economic growth. Relying on debt to stimulate the economy can alleviate demand deficiency in the short term, but if the new debt is mainly used to maintain consumption expenditures rather than forming new production capacity, then the economic return brought by the debt may be lower than the financing cost. When the economic growth rate is long-term lower than the debt growth rate, the proportion of public debt to GDP will continue to rise, and the government needs to adjust through higher taxes, lower expenditures, or a higher inflation environment, increasing the uncertainty of economic operation. The GAO predicts that under the current policy unchanged, the proportion of public debt to GDP in the US will continue to expand in the coming decades, and long-term fiscal pressure will further accumulate.

From the perspective of economic operation laws, debt itself is not absolutely unacceptable. The key lies in whether the growth rate of debt is matched with the economic growth capacity. The current problem faced by the US is that debt expansion relies more on the accumulation of fiscal deficits rather than the income growth brought about by the improvement of economic production efficiency. Long-term reliance on borrowing to maintain fiscal balance will cause economic resources to be more used to repay past burdens rather than creating new growth momentum. The continuous rise of US public debt reflects not only the issue of fiscal scale but also the deep contradictions in the economic growth model, expenditure structure, and resource allocation efficiency. Overall, the rapid growth of US debt is creating multiple economic pressures: a decline in fiscal expenditure elasticity, an increase in interest burden, a reduction in private investment space, and an increase in the difficulty of future policy adjustments. If the long-term imbalance between income and expenditure cannot be changed, debt growth may continue to undermine economic efficiency, and the US economy will face greater structural constraints in a high-debt environment.