On Sunday, November 2, technology billionaire Elon Musk renovated his warning about America’s fiscal outlook. He said the federal debt has grown so large that it cannot be fixed without a major jump in productivity.
“If AI and robots don’t solve our national debt, we are lost,” Elon Musk warned, raising fresh concern that American finances are heading toward a breaking point.
His comment resurfaced in new coverage of a recent podcast appearance, at a time when the national debt exceeds $38 trillion and interest costs remain high.
It rose from $37 trillion in August to $38 trillion on Oct. 22, marking the fastest increase to $1 trillion outside of the pandemic period and coming during an ongoing federal shutdown.
US government data sample The total public debt reached about 38.11 trillion dollars starting in October. 30, according to the Treasury’s “Debt to the Penny” database.
(Source: Congressional Budget Office)
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Does issuing debt in dollars protect the United States from bankruptcy?
The fiscal year 2025 deficit was about $1.8 trillion, according to Congressional Budget Office estimates.
A growing part of the problem is interest. Budget analysts say these payments have at times matched or exceeded some of the country’s largest programs over the past two years.
The Committee for a Responsible Federal Budget noted that interest costs exceeded spending on national defense and Medicare for much of fiscal year 2024, and current trackers show interest charges will approach $1 trillion in 2025.
The 10-year Treasury yield finished last week near 4.1%, based on the Federal Reserve’s constant maturity. data.
The spread between the 10 and 2 year yields is now slightly positive after a long reversal. Both suggest that borrowing will remain costly even if the economy slows.
The Congressional Budget Office’s latest monthly review estimates the fiscal year 2025 deficit will be about $1.8 trillion. That’s about 6% of U.S. GDP and still hasn’t changed much since fiscal 2024, even after accounting for revenue and tariff changes.
Longer-term CBO forecasts indicate that federal debt held by the public will increase from about 100% of GDP in 2025 to about 107% in 2029. The report warns that the ratio will continue to rise if current laws remain in effect.
Critics say Elon Musk is simply saying what already worries bond markets: Interest costs are higher forever and Washington’s chances of stabilizing the balance sheet are shrinking.
Others say the United States is not on the brink of bankruptcy because it issues debt in its own currency and still benefits from deep global demand. Still, they maintain that the country needs a credible plan to stop the growth of debt.
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The post Is the United States on the brink of bankruptcy? Elon Musk Says There’s No Way for America to Solve Debt Crisis appeared first on 99Bitcoins.
