Warning On U.S. Public Debt

In a recent article, we saw how the debt burden was strangling France’s public finances. But the situation is also critical in the United States, as The Kobeissi Letter points out: “Total US federal debt is now up to a record $39.4 trillion, rising +$3.2 trillion over the last 12 months.Since 2020, US federal debt is now up a massive +$16.3 trillion. This marks a +$2.5 trillion average annual increase, or +$209 billion per month..” In other words, U.S. debt is now rising by about $6.7 billion per day. A headlong rush toward the abyss.

But, as in France, it is above all the cost of this debt that is becoming a cause for concern. The debt burden, which must be paid out of the federal budget, is becoming excessive: “The U.S. Treasury now spends $24 billion each week just to pay interest, an amount that has jumped 13% year-over-year. In the first nine months of fiscal year 2026, this interest totaled $939 billion — more than the Department of Defense’s budget.”

As in France, this area has become one of the government’s main sources of spending. And here, too, it is social spending that is throwing public finances out of balance: the public pension system (Social Security), health insurance for those over 65 (Medicare), and health coverage for low-income households (Medicaid). Both the budget deficit and the debt-to-GDP ratio are comparable to those of France, at 5.9% and 120% of GDP, respectively, in 2025.

Two fundamental differences, however, are worth highlighting:

• A significantly lower tax-to-GDP ratio — almost half — with taxes and social security contributions totaling 25% of GDP, compared to 45% in France, which fuels strong economic growth for the world’s largest economy;

• The central role of the dollar, the world’s leading transaction and reserve currency, which ensures virtually infinite demand for it.

Nevertheless, the debt burden is weighing increasingly heavily on the U.S. budget. This constraint could even intensify in the near future if the Federal Reserve were to raise interest rates again in the event of a resurgence of inflation, as recently suggested by Christopher Waller, a member of the Fed’s Board of Governors (AFP). However, any rate hike automatically results in an increase in the debt burden.

Following Elon Musk’s DOGE initiative — which, incidentally, was quite successful — the new administration has abandoned any plans to tackle public spending. Worse still, the expected revenue from the tariffs imposed by Donald Trump could vanish after the Supreme Court ruled them unconstitutional. The Court’s decision would even require their reimbursement — amounting to $81 billion collected since the start of the fiscal year, which began in October 2025.

The noose is tightening. The debt burden fuels the deficit, which in turn increases the debt, creating a true snowball effect. The longer we postpone the necessary fiscal discipline, the more the only way out will be through a crisis solution — a reset: a period of high inflation, partial or total default…

We often focus on the debt-to-GDP ratio, telling ourselves that there is still some room to maneuver since Japan’s debt stands at over 230% of GDP. However, the most revealing indicator is undoubtedly the debt burden. It is this burden that drives the budget deficit into a downward spiral. And in several major economies, starting with the United States, this limit is beginning to be reached.

Ultimately, it is the very model of fiat currencies — established since the end of the dollar’s convertibility into gold in 1971 — that is entering a crisis. It is from this perspective that the current situation must be analyzed, and the resulting outlook is particularly troubling.