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🇸🇪 Sweden /Economy & Trade

US national debt grows too fast: 'Unsustainable level'

From Svenska Dagbladet · () Swedish

Translated from Swedish, summarized and contextualized by DistantNews.

At a glance

News Named sources Context piece
  • The U.S. national debt has reached a record $40 trillion, with expenditures exceeding revenues.
  • Economists like Elisabet Kopelman of SEB express concern over the unsustainable debt level and lack of a clear plan to address deficits.
  • The Trump administration hopes AI will boost economic growth and tax revenues, but current measures are seen as temporary fixes.

The United States is facing an "unsustainable level" of national debt, which surpassed $40 trillion last week, as spending continues to outpace revenue. Economists are raising alarms about the growing deficit and the lack of a concrete plan to manage it.

There is no convincing plan for how to deal with the deficits.

— Elisabet KopelmanSEB's U.S. economist Elisabet Kopelman expressed concern about the government's approach to managing the national debt.

Elisabet Kopelman, a U.S. economist at SEB, noted that while the Trump administration's efficiency agency, Doge, initially aimed to cut public spending, the efforts were insufficient. "You have cut discretionary spending under Doge, too much in some areas," Kopelman said. "And the military, which is the other part of discretionary, there you want to increase investments."

Kopelman warned that at some point, the current trajectory will become unmanageable, forcing more drastic cuts. The revenue side has also been weakened by tax cuts, which have not been offset by spending reductions. This has led to deficits that are "parking themselves at a long-term unsustainable level," she explained, likening the situation to a "rolling snowball."

You have cut discretionary spending under Doge, too much in some areas. And the military, which is the other part of discretionary, there you want to increase investments.

— Elisabet KopelmanKopelman explained the challenges in controlling U.S. public spending.

The growing debt means a larger portion of the budget is allocated to interest payments. Kopelman suggested that a broad agreement across party lines would benefit the nation's finances, particularly concerning expenditures on pensions and healthcare, which are difficult to address in the current polarized political climate.

At some point, this will not hold. Then you will be forced to make more drastic cuts.

— Elisabet KopelmanKopelman described the potential consequences of the escalating U.S. national debt.

In response to rising interest rates, including the U.S. 30-year Treasury yield exceeding 5.30% for the first time since 2007, the Treasury Department announced plans to accelerate bond buybacks to lower rates. However, Kopelman views this as a "temporary plaster" that does not solve the underlying issues, especially since the buybacks are financed by new debt. The administration's hope rests on a potential AI boom to significantly increase productivity and economic growth, thereby boosting tax revenues, though concrete plans remain elusive.

It is very difficult to see what such a plan would entail.

— Elisabet KopelmanKopelman commented on the uncertainty surrounding the Treasury's upcoming plan to address the deficit.
DistantNews Editorial

Originally published by Svenska Dagbladet in Swedish. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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