The U.S. national debt has soared to roughly $38 trillion—now exceeding 120% of the nation’s annual economic output—and leading economists and historians say urgent action is needed. In a new collection of essays released by the nonpartisan Peter G. Peterson Foundation, prominent experts from outside the organization outlined the growing risks to economic stability, global leadership, and the future of the U.S. dollar.
Their conclusion: the United States is gambling with its financial security.
Council on Foreign Relations President Emeritus Richard Haass and NYU professor Carolyn Kissane put it bluntly: “We are guilty of spending our rainy-day fund in sunny weather.” With little financial “dry powder” remaining, they argue the country may struggle to respond effectively to a major economic or national security crisis.
A Costly Crisis—Already Underway
Annual interest payments on the debt now exceed $1 trillion—more than the nation spends on defense. Economist Heather Long warned that the 2020s are “fast becoming the era of big permanent deficits,” with annual shortfalls expected to stay near 6% of GDP despite low unemployment—a stark break from historical norms.
Economist Barry Eichengreen noted that past reductions in national debt won’t be easily replicated. After World War II, debt fell due to rapid economic growth and low real interest rates. In the 1990s, the so-called “peace dividend” allowed deep defense cuts. “None of these facilitating conditions is present today,” he wrote.
Security Threats and Political Gridlock
Global instability—from Russia to the South China Sea—places upward pressure on defense budgets rather than allowing reductions. Meanwhile, rising polarization makes Congress less able to agree on meaningful fiscal reforms.
Most large entitlement programs remain politically untouchable, and the U.S. collects less tax revenue as a share of its economy than other major nations. As a result, experts say more revenue will likely be required to stabilize the nation’s finances.
Haass and Kissane also highlight how debt servicing crowds out critical investments. Every dollar spent on interest, they explain, is a dollar “not available for more productive purposes,” including cybersecurity, infrastructure, and public health.
They describe the crisis as moving in “slow motion”—the kind of creeping danger that democracies historically struggle to confront. The absence of a sudden collapse doesn’t mean the risk isn’t real: “The day will come when the boiling water finally kills the frog,” they warn.
Dollar Dominance Is No Longer Guaranteed
Historian Harold James sees the current situation as “the middle of a very dangerous experiment with the U.S. dollar and the international monetary system.” He argues that rising political interference and diminished institutional trust increase the “specter of political risk in U.S. sovereign bond markets,” raising the risk that investors may eventually seek alternatives.
Princeton professor Layna Mosley echoed that concern. For decades, the global role of the U.S. dollar granted the country what French statesman Valéry Giscard d’Estaing famously called an “exorbitant privilege”—the ability to borrow enormous sums cheaply. But she warns that recent political decisions have “undermine[d] the rules-based liberal international order from which the U.S. benefitted greatly.”
If foreign investors grow wary, everyday Americans could pay the price through higher borrowing costs—from mortgages to car loans.
Haass and Kissane likened the situation to refusing basic insurance just because disaster seems unlikely: a risky gamble that may leave the country dangerously exposed.
