The U.S. national debt has hit $40 trillion, and the Trump administration is facing questions about its budget plans as a result. The good news is, there has one: The American economy will apparently grow its way out of any fiscal crisis.
“It’s been a problem for 35 years,” Trump told reporters Friday. “And what we have now … is we have tremendous growth. And the way you take care of debt is with growth, and we have tremendous growth. We’ve never had growth like we have right now.”
“There’s nothing magic about the $40 trillion number,” Treasury Secretary Scott Bessent said on CNBC last week, “And we can grow our way out of that.”
Economists would be inclined to agree with Bessent: The value of the debt, while an extraordinary milestone, doesn’t hold much relative weight. What economists (and more importantly, the bond market) is watching is the debt-to-GDP ratio: This demonstrates the level of borrowing by a country against its economic capacity to repay and service it.
