Waiting for Doomsday: Scenarios of the US debt crisis
The national debt of the United States, which has exceeded the $36 trillion mark, was previously nothing more than a figure on the world-famous electronic scoreboard in New York. Now it is a factor dictating the terms of Washington's budgetary and even geopolitical strategy. It's not even about the impressive amount of debt (it doesn't mean much in isolation from the context), but about the annual maintenance payments approaching a trillion. And over time, they will only grow, exacerbating the problem. What the scenarios of the upcoming fiscal shock in the United States look like and why tariff "treatment" of the problem turned out to be a palliative — in the Izvestia article.
The Compound Interest Trap
For a long time, American politicians have lived in a comfortable paradigm: debt can grow indefinitely as long as interest rates remain low. However, the inflationary shock of recent years and the Fed's forced austerity policies have destroyed this foundation. In 2025-2026, we saw what experts call the "snowball effect."
According to recent data from Fortune and the Congressional Budget Office, net interest payments on the US national debt have become one of the largest items in the federal budget, actually equaling (and in some quarters surpassing) national defense spending. When a country spends more on paying off past loans than on maintaining the most powerful army in the world, it is a sure sign of a structural impasse.
The problem is as follows: old debts taken at 1-2% (normal rates in America from the late noughties to the early 2020s) have to be refinanced at current rates, which are much higher. So, a trillion is just the beginning. These expenses do not produce goods, do not create infrastructure, and do not sponsor science. They simply consume taxes, depriving the government of room for maneuver.
Trump and the illusion of tariff rescue
Donald Trump went to the polls with harsh criticism of Biden's "wastefulness," promising to bring order to finances. However, the first year of his second term showed that the inertia of the budget deficit is stronger than political will. Despite the creation of the Department of State Efficiency (DOGE) under the leadership of Elon Musk and attempts to reduce the bureaucratic apparatus, spending on social security and medicine (Social Security and Medicare), which are the main drivers of debt, remained virtually untouchable — for political reasons.
The main hope of the administration was duties. Trump promoted the idea that large-scale tariffs against China, Europe and Mexico would become not only a trade war tool, but also a powerful fiscal lever capable of replacing the income tax or at least significantly reducing the deficit.
However, the reality of 2025 turned out to be more complicated. Even under the most aggressive scenario, customs duties bring several hundred billion dollars a year to the budget. This is an impressive amount, but it pales against the background of the annual budget deficit, which is stable at $ 1.5–2 trillion. The duties were only able to slow down the fall slightly, but not stop it. Moreover, the trade wars have led to a slowdown in global activity, which has indirectly reduced tax revenues from the US corporate sector. As a result, the deficit under Trump not only did not disappear, but continued to grow, fueled by the same sky-high interest rates on the debt.
Disaster Scenarios: The CRFB View
The Committee for a Responsible Federal Budget (CRFB), one of the most respected nonpartisan think tanks, outlined the contours of a possible fiscal crisis in its recent report. Experts emphasize that it will not necessarily come as an instant collapse; most likely, it will be a series of painful events.
The first scenario is a sudden loss of trust. This is a classic version of a market shock. At some point (perhaps after a failed Treasury bond auction), investors will decide that the risk of non-payment or depreciation of the dollar is too high. This will lead to a sharp jump in bond yields. The government will have to offer even higher interest rates to borrow money, which will instantly bring the cost of debt servicing to an absurd 30-40% of the budget. In this situation, the United States will face a choice: either default or turn on the printing press at full capacity, causing hyperinflation.
The second option is "slow strangulation". The United States avoids an obvious crisis, but finds itself in a situation of a "lost decade" on the Japanese model, but with American specifics. Huge debt is washing away private investment (crowding out effect), GDP growth is stagnating at 1%, and inflation remains stable above 4-5%, gradually devaluing debt. This is the path of the slow decline of the dollar as the world's reserve currency and the loss of the United States' status as a technological leader, as there is simply no money in the budget for breakthrough projects.
The third option is the most likely in the short term. The constant battles over the debt ceiling in Congress, periodic shutdowns, and the inability to adopt a long-term cost-cutting plan are leading rating agencies to continue lowering the U.S. credit rating. The dollar is gradually losing its uniqueness ("exorbitant privilege"), and countries around the world are actively switching to alternative assets (gold, baskets of regional currencies), which makes financing the American deficit even more expensive. It is quite possible that we are already seeing the first signs of this scenario.
The geopolitical dimension of debt
The problem of the US national debt has long ceased to be an internal one. Competitors, primarily China and the BRICS countries, are closely monitoring this fiscal degradation. For them, Washington's debt trap is a window of opportunity. The more resources the United States spends on interest payments, the less it has left to provide military assistance to allies and satellites and to maintain infrastructure in the Pacific Ocean. In a sense, American bonds have become a "financial weapon" that is now deployed against the owner himself. The huge amount of debt in the hands of foreign countries allows them to exert indirect pressure on the Fed and the US Treasury (as we saw in the recent escapade of EU representatives on the issue of Greenland).
Mathematically, there is a way out, but politically it looks like suicide for any party. To stabilize the situation, the United States needs to simultaneously: carry out a tough reform of social programs, raising the retirement age and limiting payments; significantly raise taxes, not only for the rich, but also for the middle class; ensure GDP growth rates above 3-4% over a decade, which is extremely difficult, if not impossible with the current demographics and the level of debt.
Instead, Washington chooses the path of least resistance: attempts to "plug the holes" with duties and hopes that the boom in artificial intelligence will magically create millions of new jobs and trillions in taxes. As a result, the United States is approaching a point where the market may stop believing in the exclusivity of American treasuries.
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