'Some form of crisis is almost inevitable': The $38 trillion national debt will soon be growing faster than the U.S. economy itself, watchdog warns
What they're not telling you: The $38 Trillion Debt Trap: Who Profits While America's Bill Comes Due The Federal government is now locked into a fiscal trajectory where debt will grow faster than economic output—a mathematical guarantee that transfers wealth from working Americans to financial asset holders, and nobody with power is moving to stop it. The Government Accountability Office, the congressional watchdog agency, has issued a stark warning: the United States faces "some form of crisis" as the $38 trillion national debt accelerates beyond GDP growth. This isn't a forecast for 2040.
What the Documents Show
The crossover is arriving within years. The GAO's analysis, reported through Fortune, cuts through the noise of quarterly earnings reports and stock market rallies to name the actual problem: structural insolvency in the world's largest economy, engineered through decades of tax policy, military spending, and entitlement financing that no institution bothered to reconcile. Here's what the mainstream coverage won't emphasize: this debt spiral is a transfer mechanism. When the Treasury borrows at current rates—roughly 4.5 to 5.5 percent depending on duration—it funnels hundreds of billions annually to bondholders. Who holds those bonds?
Follow the Money
The top 10 percent of American households control roughly 89 percent of all stocks and bonds. The Federal Reserve System itself now carries $5.3 trillion in assets, much of it Treasury securities purchased through quantitative easing operations that inflated financial markets while wage growth flatlined. Jamie Dimon's JPMorgan Chase, Bank of America, and Goldman Sachs manage trillions in fixed-income portfolios benefiting directly from Treasury issuance. The GAO isn't proposing solutions; it's diagnosing neglect. No Treasury Secretary since Paul O'Neill has been permitted—or willing—to force a real reckoning with the math. The Congressional Budget Office produces the same charts every year.
What Else We Know
The Federal Reserve, chaired by Jerome Powell, adjusts rates based on inflation and employment targets while the debt-to-GDP ratio deteriorates in the background. When a crisis arrives, the script is always the same: emergency measures, Federal Reserve liquidity injections, and preservation of asset values while working Americans face austerity. What makes this structural rather than cyclical is the composition of spending. Defense contractors—Lockheed Martin, Raytheon Technologies, General Dynamics—have locked in $820 billion in annual appropriations with bipartisan support. Entitlements, which voters expect, account for roughly 60 percent of the budget. Tax revenue, as a percentage of GDP, has fallen due to decades of rate cuts.
I find the GAO's restraint remarkable—and infuriating. They're calling it a "crisis" while using language that suggests an inevitable natural disaster, when what we're actually witnessing is a policy choice made every fiscal year by people in positions of power who benefit directly from the arrangement.
The pattern here is institutional capture disguised as macro prudence. The Federal Reserve manages monetary policy while the banking system it regulates holds trillions in Treasury securities that appreciate when rates rise. Treasury officials move to Wall Street firms and back again. Lobbyists representing defense contractors, financial services firms, and real estate interests contribute to both parties' campaigns. The Tax Foundation—funded by corporations—publishes reports arguing that tax cuts stimulate growth despite decades of evidence that they primarily flow to capital gains and dividends. The beneficiaries aren't even hiding anymore.
What I find striking is that the GAO delivered this warning and no senior elected official called a hearing. No Treasury official announced a commission. No journalist asked Jerome Powell directly: if debt-to-GDP is unsustainable, why is the system still operating this way?
Here's what you need to watch: when the crisis arrives—and it will—demand to know whose assets were protected in the emergency response before anyone accepts a bill for "reform." The answer will reveal everything about where actual power lives.
Primary Sources
- Source: Google News (Money & Markets)
- Category: Money & Markets
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