A large and ugly debt

As I wrote here in the previous edition, Elon Musk left Doge and the results were nothing less than disappointing. But the fault cannot die single. The department that was the responsibility of Musk made, of course, several mistakes. It has not attacked fundamental sectors that consume a large portion of the budget – such as Medicare, Medicaid or the Defense Department, for example – and also failed.

Now, regardless of whether the agency has shown some inefficiencies that prevented her from getting close to the goals she initially proposed, Donald Trump was certainly an obstacle to reducing expenditure and public debt. Last «Big, Beautiful Bill» (Big and beautiful bill, which was approved by Congress, is a paradigmatic example of the once -criticized trump that Trump has criticized, and well, in Biden.

According to the congressional Budget Office, this legislative package will increase debt in «About 3 billion, or significantly 5 billion if it becomes permanent»will increase the «Deficit for 7% of Gross Domestic Product (GDP) until 2026»will increase debt interest between 2024 and 2034 «For 1.8 billion (4.2% of GDP)»will increase the debt of «100% of GDP today to 124% until 2034, 129% of GDP if it becomes permanent, and 133% of GDP if interest rates are kept high». Shortly, it is absurd. In addition, it makes clear why Elon Musk moved away, harshly criticizing the republicans who voted for the bill with the full awareness that it is highly harmful to the country’s financial health. The businessman even dubbed the legislative package of «Debt Slavery Bill».

But the phenomenon is not exclusive to Trump, which is just following a trend. There is a graph that has shown the evolution of American debt since the late eighteenth century, particularly alarming. It took 221 years for debt to reach the 12 billion billion, and the significant increase in this value is mainly from the 1980s. To understand the dimension of strangled indebtedness of recent years, the value added to debt over the past 6 years has been 13.5 billion. In 2019 he was in the 22.7 billion of dollars, in 2024 was in 35.5 billion and, in April this year, was set in 36.2 billion. Admittedly, there was a pandemic however, but it does not justify this substantial increase. Now, just the «Big, Beautiful Bill» It will be responsible for an increase of 3 to 5 billion.

But there is more. Debt interest has already exceeded the $ 1 billion mark, according to Fred, that is, about 20 % of total state revenues projected for the 2025 fiscal year, exceeding the expenses in defense.

In the face of this scenario, let’s see what history has to teach us. According to Ferguson’s law, theorized by Scottish historian Niall Ferguson, « Any great power that spends more on debt service than with the defense runs the risk of no longer a great power ». The US has already begun to violate it, and if the international order is going through a complex period in which American hegemony is threatened on several fronts, this fiscal situation only sharpens a problem that should alarm any polycymaker American, Republican or Democratic.

Thus, there is no doubt that the bill is large and ambitious, with significant tax reductions. The problem is that it increases a debt that becomes increasingly ugly.